Just before 2pm on Sunday afternoon, a group of police officers armed with machine guns piled into Norwood Road, in West Norwood, in unmarked police cars.
Witnesses took to social media to document the dramatic scene as people were warned to stay inside shops while officers blocked the roads.
Police helicopters were also seen circling overhead.
Videos posted on social media show the heavily armed police officers standing in the road on the busy highstreet.
One person wrote: “Armed police and helicopters – what is going on in West Norwood today?”
Eyewitnesses reported that the specialist police force appeared to arrest around “three or four men”, while their colleagues told residents and workers to “stay indoors” and “stay away”.
Footage from the unsettling scene appears to show three people with their hands held behind their backs or above their heads, facing a wall while they are surrounded by police officers.
Witnesses at the scene said it was over in around half an hour and was “very expertly done”.
The police are yet to comment on the incident.
A worker at Norwood Halal Butchers told MyLondon: “We saw bits and pieces ongoing. Some armed police surrounded a flat opposite our shop, went in there and took some people out.”
He said officers arrested “three guys” and then drove away.
Another local worker, from Royal Dry Cleaning, also seemed to think the police “arrested three or four boys”.
A local restaurant worker said the ordeal only lasted around half an hour, and claimed armed police blocked the road and told people to stay away.
He told MyLondon: “There were, on my side of the road, three police officers in tactical gear with machine guns and everything, blocking everyone. Even people in the shops they were telling not to come out, and to stay indoors.
“On the other side of the road where B&Q is, again they were blocking it, telling people not to move and to look away.
“It lasted about half an hour and then they started packing up. I didn’t see any police vehicles like they use to transport criminals. There was a helicopter hovering overhead as well.”
The Metropolitan Police has been contacted for comment.