A KNIFE-wielding man rampaging outside Flinders St station has been tasered and arrested in dramatic scenes in Melbourne's CBD this morning.

Video footage shows the moment police pounced on the man, who was wearing a helmet and carrying a large knife, on the corner of Swanston and Flinders street.

Police and members of the Critical Incident Response Team rushed to the scene just before 8am following reports of a car allegedly being driven erratically.

Witnesses have told the Herald Sun a man was pinned to the ground and arrested.

A green Toyota Rav 4 is stopped in the middle of the road while numerous items including helmet, a bag and a pair of boots are strewn across the road.

One man said he threw a bike at the Rav 4 to stop it as the driver continued to perform "doughnuts" in front of Flinders St Station.

He said the male driver was wearing a full body suit and seemed to be attempting to run people over.

"I looked up and saw this guy doing doughnuts ... he started coming down here (Swanston St) driving up and down," he said.

"He was trying to get on the footpath and then started trying to hit people.

"He tried to run into Fed Square.

"He was going mad, he was driving up and down on the road."

The witness said he confronted the driver who he said was then tasered by police and taken away.

The hero witness said the man came towards him with a baton and a knife.

"He was prepared," the man said.

Stefanie Rezzaro said the man was dressed all in black and police had removed his boots and a backpack.

"He looked really slight, really young - he was on red P plates," Ms Rezzaro said.

"It's really scary- everyone is in shock."

Flinders st closed, allegedly driver attempting to hit pedestrians @7NewsMelbourne pic.twitter.com/zdU3ajA4YI

- Phoebe Powell (@phoebe_powell) September 29, 2017