Tactical officers swarmed Melbourne's city centre on Tuesday morning with unmarked police cars blocking Spring Street near Victoria's parliament.
Witnesses watched as heavily armed police raced through the streets in search of the man, carrying a gun, before surrounding him at a nearby hotel.
Police confirmed they had arrested a 48-year-old Hoppers Crossing man wanted over two carjackings earlier on Tuesday.
During the first incident, police say the man made demands for a white small 4WD after it stopped at traffic lights in Tarneit, pointing a firearm at the driver's head before taking off in the car.
He then allegedly carjacked a second vehicle at gunpoint in North Melbourne before dumping it in Lonsdale Street in the CBD.
Police said the man was arrested at a Melbourne hotel, and he put in an ambulance with non-life threatening injuries.
A staff member at the Hotel Lancemore, who did not want to be named, said the man walked into the hotel and pointed a gun at him, sending him running.
"It was such a fright," he told AAP.
Hotel guest Humberto Aguilar said he was downstairs in the lobby waiting outside the toilet when he saw armed police.
"I hear a guy scream out ... he put the gun in front of me," he said.
"I put my back to the wall and ran outside."
Port Melbourne resident Xavier was on his way to community school in Richmond when he saw a silver four-door Hyundai "flying" through the streets.
The 14-year-old said the driver was trying to hit people and would not stop.
"I almost got hit by the guy who was driving," he said.
"I had to run outside of his way.
"He was going about 100km/h on the tram tracks ... and then he jumped off the gutter."
Detective Senior Sergeant Luke Flint commended officers involved in the chase and arrest.
"This co-ordinated response led to the matter being resolved within an hour, and thankfully, no serious injuries to members of the public or police," Det Sen Sgt Flint said.
The show of force comes just a day after Victorian police chief Mike Bush announced sweeping changes to the organisation that would include more police ditching the desk and getting back on the beat.
Mr Bush, who served as New Zealand police commissioner from 2014 to 2020, took over the role in June after a period of leadership turmoil and unrest within Victoria Police.
"We are extremely concerned about the level of crime that occurs on our streets," the chief commissioner told Nine's Today program as he outlined plans to reorganise the police force to enhance visibility and prevent crime.
Fresh data revealed Victoria is enduring the worst crime surge in its history, including 5400 individuals arrested 10 times or more in the year to June.
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