Police have arrested a man after he was seen attacking a car with a chainsaw in a street near two Melbourne schools, forcing them into lockdown.

Key points: Police responded to reports of a man with a chainsaw near a school about 1:00pm

Police responded to reports of a man with a chainsaw near a school about 1:00pm They found the man at a house nearby and negotiated with him before taking him into custody

They found the man at a house nearby and negotiated with him before taking him into custody Parents were told not to pick up their children from two schools until police advised it was safe

The man's behaviour prompted witnesses to call triple-0 as St Helena's Secondary College and Glen Katherine Primary School ordered students to stay inside.

Critical Incident Response Team officers were called to the area, in Eltham North, and found the man inside a home about 1:00pm.

He surrendered into custody after "great negotiations about patience" about 3:30pm, police said.

"He was in quite a confused state of mind and so he's going to be taken to hospital to be checked out," Acting Senior Sergeant Cole Dods said.

"It's believed he had been damaging some personal property of his and that's the cause of the phone calls to triple-0."

Police officers took the man into custody about 3:30pm. ( ABC News )

Police said the man, who was aged in his mid 30s, had damaged the bonnet of his car and some trees on the nature strip.

The chainsaw was found in the front garden of the house he took shelter in, police said.

Nick Orval, who has children at both schools, said he came across the man at school pick-up time.

"There was a guy on the nature strip who yelled out to me and I just thought, I don't know you, what are you doing?" he said.

Police were outside the property for about two hours. ( ABC News )

Mr Orval said as he drove away he could see the man swinging punches and running down the middle of the road.

He said his children were kept at the school for about an hour before they were allowed to leave.

'Feels like something that wouldn't happen in Australia'

It was the last day of term for both schools and senior students at St Helena's were due to finish school at 1:00pm, but parents were told not to pick them up until police advised it was safe.

"We did that until we were confident that our male was in the house and we had a cordon around him and then we got back in touch with the schools and said everything was OK," Acting Senior Sergeant Dods said.

Police negotiated with the man, who was inside a home, for about two hours. ( ABC News )

Simone Plummer, a parent of a child at Glen Katherine Primary, said parents were told there was a "suspicious person" near the secondary college's grounds.

"It's definitely concerning and there's lots of police there so I think they were surrounding him to try and catch him," she told the ABC.

"It sort of feels like something that wouldn't happen in Australia but I suppose the safest thing to do is keep them in the school."

In a statement, Victoria Police said: "Police have arrested a man in Eltham following reports he was observed allegedly with a chainsaw on Parry Road about 1pm.

"No one was injured during the incident."

"The man was arrested at an address on Parry Road without further incident and will be taken to hospital for assessment."