There were initial reports that multiple people had been stabbed in the Australian city’s Central Business District, but it is now believed one woman was attacked.
In shocking video taken by Australian news site 7 News, the man can be seen running into a street with a huge knife in his hand.
He then leaps on a car and screams Allahu Akhbar – as those on the street run in terror.
But one man arms himself with a chair and tries to confront the suspect.
The clip then cuts to the man being restrained by several members of the public.
A milk crate is held over his head and two chairs restrain his body.
It has now emerged that two of those who managed to stop the alleged attacker were Brits.
Paul O’Shaughnessy, 37, and his brother Luke, 30, from Manchester, were in their office when they heard a disturbance outside the building.
The brothers and two of their colleagues saw the alleged attacker wielding what Paul said was knife and covered in blood, and chased him.
A New South Wales Police spokeswoman said the suspect was apprehended near Wynyard Street at about 2pm local time (5am GMT).
The spokeswoman continued: “It is too early to determine whether there were any injuries.”
A body has been found nearby the attack, although it has not yet been confirmed whether the two incidents are linked.