Parents picking up their children from school in the tiny Bay of Plenty town of Thornton were told they were under lockdown in the library.
The Armed Offenders Squad is assisting Bay of Plenty police following reports of a man with a firearm in Thornton near Whakatāne.
A Rotorua Daily Post reporter at the cordon at the intersection of Thornton Rd and West Bank Rd saw armed police walking a handcuffed shirtless man to a police truck.
Thornton School was temporarily put in lockdown but the children have since been able to leave, a police spokesman said.
There have been no injuries, police say.
Local parent of a child at Thornton School Kelly McGuire, said when she went to pick up her daughter from school the children were all in lockdown in the library.
There were roadblocks around the entrance of the school and there was an announcement that only children who had parents that had arrived were allowed to go, but everyone else had to stay in the building.
McGuire said they were clearly turning parents away as there were not many there.
When she went out to her car, five police officers were standing around the front of the school fully armed.
The kids were told a commotion had happened down the road, but it had nothing to do with the school.
McGuire said the school handled it incredibly and kept the children so calm.
Earlier, a witness at the scene told a radio station that nearly 20 armed police were near Thornton Bridge with about close to 10 police cars.
Police received reports a person had driven a vehicle into a property near the school at 2.24pm.
Members of the public are being asked to follow the instruction of emergency services in the area as the situation unfolds.