South Coast Region Police are negotiating with a man who is reportedly armed with a knife in the Nowra CBD.
The drama began just after 10am.
A witness said the man, who is clearly agitated, is sitting on a brick fence outside a home on Kinghorne Street surrounded by officers who are attempting to end the confrontation.
The witness said Tactical Response Police have been called to scene.
Police have blocked off surrounding streets and have locked down businesses.
They are are urging to public to avoid the area.