Terrifying footage shows police taking down 'fake gun-toting drunk' on busy Melbourne street

Confronting vision has emerged of a man allegedly waving a fake firearm at pedestrians on a busy Melbourne street.

The footage, obtained by 9NEWS, shows the 27-year-old strolling slowly down Chapel Street, clutching the realistic-looking firearm in his right hand yesterday.

He is seen waving the firearm at the footpath and concealing it behind his back as another pedestrian walks past.

When police arrive, believing the weapon is real, they shout "Drop it!"

The man slowly complies, lowering his weapon to the pavement and raising his hands before police pounce, pinning him to the ground and handcuffing him.

The incident unfolded when concerned passers-by phoned police just before 9am yesterday, alleging the man pointed an imitation firearm at pedestrians on Malvern Road and Chapel Street.

One brave witness, Mark Mullan, followed the man down Chapel Street for 150 metres and filmed the alarming exchange.

The boxing coach said he was considering tackling him before police arrived and made the arrest.

"I heard a lady scream and go run across the road and then I've gone and looked a bit closer and gone, yeah, he definitely had a gun in his hand," Mr Mullan told 9NEWS.

"He just pulled back - like that. He didn't say nothing, and I thought he was going to hit me or shoot me and I've stepped back."

Another passer-by, Elliot Rothfield, said he was "absolutely" convinced the gun was real.

"I had no idea, I thought it was a real gun in his hand," he told 9NEWS.

The Prahran man was arrested for being drunk in a public place, and has now been charged over the incident.

He appeared at Melbourne Magistrates’ Court today facing charges of prohibited person possessing an imitation firearm and assault-related offences.

He has been remanded in custody and will face court next week.

It's alleged that he was out on bail at the time of the incident.