An Armed Offenders Squad has been flown into the Coromandel following reports of a gunfight.
Seven police cars were already in the Kennedy Bay Road area and residents said a police helicopter was circling overhead.
Residents have told RNZ news they heard gunshots and saw two young men being led away in handcuffs.
"A fella who lives further up the street came running past my house yelling there had been a shootout at his place but he wasn't involved," said a woman.
A staff member at Harataunga Marae, on Kennedy Bay Road, said least two people carrying guns discharged their weapons.
The staff member said shots were heard about midday and he had locked the marae gates until the situation was over. He said 30 people were at the marae, including 15 children.
A section of the road is still cordoned off.