A dog unit and about half-a-dozen officers moved into the Philip Laing Building on Rattray St after a report from a member of the public of a man "acting suspiciously'' and holding a knife inside his jacket about 11.10am.
Staff in neighbouring offices inside the building could be seen looking from windows as police officers and a dog entered the building after a brief meeting outside.
The 43-year-old man did not struggle as police led him to a patrol car.
The dog unit was not required to apprehend him.
A police spokesman said "at no time'' did the man present the knife or make any threats towards Child, Youth and Family staff and he was arrested without incident.
The reception area of the building was locked down and staff followed procedure to ensure the safety of the public and themselves, he said.
A woman sitting outside the building during the incident told the Otago Daily Times she was his case worker but would not comment further.
A Ministry of Social Development spokesman confirmed staff were not threatened.
The man has been charged with possession of a knife and will appear in the Dunedin District Court at a later date.
