Army bomb experts were called to the scene in Harewood Street after the alarm was raised to police when a suspicious package was spotted at around 8.40am yesterday.
Staff were evacuated from surrounding businesses, including at the new Victoria Gate development, and public transport and car journeys were affected due to a police cordon being put in place.
But police said last night that the bomb scare was a hoax, and have arrested a 35-year-old man.
A number of city centre roads were shut, including Eastgate and Vicar Lane southbound, but nearly four hours later West Yorkshire Police said the “package” was found to be safe.
Chief Superintendent Paul Money, Leeds District Commander, said: “We always treat any incident of this nature very seriously, and this morning we quickly put appropriate measures in place to keep people safe while this incident was dealt with.
“Clearly this caused significant disruption to people living and working in the city centre and to local businesses and we would like to thank everyone for their patience and support during this incident.”
He said enquiries are ongoing.