Police converged on Sydney's Moore Park Entertainment Quarter at around 4:45pm on Monday, following reports of a man carrying a firearm.
Officers, including some in tactical gear surrounded two men, as confused shoppers ran for cover.
Two men, aged 35 and 39, were arrested with police seizing a replica firearm, bulletproof vest, fake police badge, plastic handcuffs and a cardboard box labelled "Hard Drugs" - handwritten with marker pen in large, comical font.
Both were taken to Surry Hills Police Station where during a search of the older man, police say they found prohibited drugs.
The older man was charged with possession of a prohibited drug and will face court on August 20.
The 35-year-old man was charged with possessing an unregistered, unauthorised pistol in a public place and behaving in an offensive manner in a public place.
He was refused bail and will face court on Tuesday.
Several people posted video of the incident to social media including a post with the caption, "something going down in Moore Park Sydney right now" which showed 20-to-30 police officers swarming the area.
Close to Allianz Stadium and the Sydney Cricket Ground, the Moore Park entertainment precinct spans over 11 hectares with an array of cinemas, restaurants, bars and shops.
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