Police say they are investigating what they believe is a "false report" of gunshots in inner Sydney.
An apartment block in Ultimo was in lockdown on Wednesday afternoon after reports that two men had been shot and that a gunman was on the loose.
Police and ambulance were called to the apartment in Jones Street, Ultimo at 2.15pm. They were told a man had been shot. A police spokeswoman said there had been an altercation.
When officers arrived, a man surrended to them. He is now in custody and is being interviewed at City Central police station, police said.
A local man, Steve, said he was told to get inside a local business when the police arrived.
"I just saw a bunch of cops arrive wearing bullet proof vests and then more arrived. There were vans, ambulance ..." he said.
"They were saying some guy had shot two people and he is still on the loose and to stay inside."
Police said they searched the area but could not find anyone who had heard gunshots. They said they did not find a victim or a crime scene.
Two women and a men were also assisting investigators with their inquiries, police said.