NSW police have arrested and charged two men after one of them allegedly brandished a fake replica gun, wearing a bulletproof vest with a US flag and carrying a toy police badge, at a busy Sydney entertainment precinct, AAP reports.

Uniform and specialist police swarmed the pair at the Entertainment Quarter at Moore Park on Monday afternoon.

Chaotic social media footage showed dozens of police officers including some wearing tactical gear surrounding the alleged offenders and confused shoppers running, just before 5pm.

On arrival, officers located two men, one of whom was allegedly wearing a vest and carrying a firearm, police said in a statement.

The two men, aged 35 and 39, were arrested and a replica firearm, a vest, plastic handcuffs, and a badge were allegedly seized.

Both were taken to Surry Hills Police Station where during a search of the older man, police allege they located an amount of prohibited drugs.

The younger man was charged with possessing an unregistered, unauthorised pistol in a public place and for offensive behaviour.

He was refused bail to appear in court today.

The older man was charged with possessing a prohibited drug.

He was granted conditional bail to appear in court on 20 August.