Police are not ruling out further arrests related to an incident in which three shots were fired in central Dunedin yesterday.

A man was arrested yesterday and appeared in court this morning on a firearms charge. Police said they were working to apprehend another man involved in the incident.

Witnesses at the scene, the intersection of Manor Pl and Melville St, said they heard three shots about 11.10am.

Police showed up about five minutes later, cordoning off the intersection with cars and taking statements from witnesses.

Heavily armed members of the police armed offenders squad gather outside an address in Carroll St after shots were fired in Dunedin yesterday.

One witness said he saw a man with a mask on driving a Subaru Legacy.

Another man came running across the road to the car, also wearing a mask.

The pair then took off in the Subaru.

Three .22 shell casings lying in Manor Pl, downhill from the roundabout, had road cones placed over them by police, the witness said.

Another witness had been using a nail gun nearby.

“As I put it down, I heard a bang. I was like ‘uh ... that’s not really a nailing gun’,” the witness said.

A police photographer later visited the scene to photograph the shell casings.

Photographs are taken of a spent .22 cartridge case (circled) at the Manor Pl-Melville St intersection in Dunedin after three shots were fired yesterday morning.

A police spokeswoman said no-one was injured during the incident.

Initial information suggested the involved parties were known to each other and police did not have concerns for the wider public, the spokeswoman said.

Shortly after the incident happened, about 11.40am, the armed offenders squad (AOS) swooped on an address in Oxford St in South Dunedin.

No arrests were made and the spokeswoman was not aware of any items of interest having been recovered.

About 3pm, the AOS searched an address in Carroll St, between Melville St and Hope St, while armed general-duties officers maintained cordons.

Officers had been searching for the man who allegedly fired the shots, but were once again unsuccessful, the spokeswoman said.

However, yesterday evening the spokeswoman said a 44-year-old man had been arrested and charged with discharging a firearm to intimidate.

The man has appeared in the Dunedin District Court today.

“Investigations are ongoing and police have not ruled out further arrests,” a spokesman said on Tuesday morning.