The north encircled by evil gang (4)
I believe the answer is:
band
'gang' is the definition.
(both can mean a group of people)
'the north encircled by evil' is the wordplay.
'the north' becomes 'N' (abbreviation).
'encircled by' means one lot of letters goes inside another.
'evil' becomes 'bad' (associated in meaning).
'n' put within 'bad' is 'BAND'.
(Other definitions for band that I've seen before include "Music ensemble" , "Body" , "Ring or musical group (4)" , "Players" , "Strip, belt; playing group" .)