North Yorkshire Police were called to Tuke Avenue, Tang Hall, in York, at 7.26pm on Saturday after the armed man was reported by passers by.
The street was shut down during the police operation.
Several crossbows and “related weaponry” were seized during a search of a house but the suspect was not found at the scene.
North Yorkshire Police said it stood its fire arms operation down at just after 9pm on Saturday but enquiries remained ongoing.
After receiving a tip off armed police swooped again on another house in the same street in the early hours of this morning and made two arrests.
A 27-year-old man was arrested for affray and a 50-year-old man was arrested for obstructing the police. The arrests took place just after 1.30am.
Further crossbows were also seized in the second address.
North Yorkshire Police said that the second firearms operation was stood down at 2.18am while the investigation into the alleged incident continued.
Both men remain in police custody today for questioning.
Police said officers had used “appropriate tactics to minimize any risk to the public.”
Witnesses or anyone with information about the incident should contact North Yorkshire Police on 101, select option one, and speak to the force’s control room.
Alternatively people can call Crimestoppers anonymously on 0800 555111 and quote the reference number NYP-20062015-0471.