Sefton Holmes (22) was arrested at 1.15pm after his band, Valley Tapes Showcase, performed in the Octagon at 1.15pm.
He was drinking from a bottle concealed in a brown paper bag and appeared intoxicated, throwing his drum sticks into the crowd at the end of the gig. He initially resisted attempts to arrest him.
Holmes was charged with breaching the liquor ban and bailed to appear in the Dunedin District Court at a later date.
Dunedin Fringe Festival director Paul Smith, who witnessed the arrest, said it was "pretty disappointing".
Police have not been amused at some of the festival antics.
On Thursday, police detained actor George Parker as he walked along George St wearing only an apron and a feather wig to promote his play Ella and Susn.
Police were also unhappy after an actor dressed as a panda bear was seen in the Octagon with a toy gun promoting the play Drowning Bird, Plummeting Fish on Wednesday.
