Emergency services were called to Kinghorne Street around 9.30am on Thursday, February 1, following reports a man was armed with a knife.

The city-centre location was blocked off for hours as police, tactical and dog squad officers spoke to the man in the front yard of a home located near a number of businesses.

Just after 2pm the mental health emergency was finally over.

"A man has been taken to Shoalhaven Hospital for assessment," a police spokeswoman told the Mercury.

Earlier in the day a number of Kinghorne Street workers trapped behind police lines spoke out on the condition of anonymity.

"They [police] were saying that the person had a knife in his hand," one worker said.

"The coppers have been here for the last two hours trying to negotiate with the person."

This worker has seen the man and estimates he is aged 25 to 30 years old.

Dozens of police, tactical officers with shields and the dog squad are in the street as negotiations continue.

"We're just waiting and waiting, hopefully they can negotiate with him," the worker said.

"The police are being patient, they're better prepared this time."

This is the second major mental health incident in Nowra during recent weeks after police were called to a Junction Street medical centre on January 10.

Alexander Pinnock was shot dead after he emerged from Nowra's Junction Street Family Practice brandishing a gun.

At 1pm Thursday, paramedics remained on standby in Kinghorne Street. So far they have not treated anybody.

A woman who works near the standoff said staff in her workplace are worried, but doing OK.

"Quite a few people are still on edge after what happened a few weeks ago," she said.

"Police look like they've got it under control [this time]."

She reassured the community that they are "absolutely fine" as the standoff continues.

"There's been a lot of correspondence from the police checking in on us," she said.

Another Kinghorne Street worker said a police operation vehicle is stationed in a business carpark.

"The whole street is blocked off at the moment," he said.