The man is a member of the Australian army and was dressed in camouflage when he went on his training exercise in Rochedale South, a suburb of Brisbane.
The commotion began when a local resident spotted the man and called the police believing a gunman was at large.
It resulted in a full police response including patrols, Polair, and officers in bullet-proof vests.
Two schools and a childcare centre also went into lockdown.
Moreover, staff at a nursery moved 75 babies and toddlers into locked rooms and closed the blinds before the man was forced to the ground by police.
The man was undertaking routine physical training exercise in a public area and was unaware of the disruption the training activity had caused, according to a Department of Defence spokesman.
"The member was wearing a military uniform and carrying a training aid which resembled a replica weapon," the spokesman said.
"Defence apologises for the concern or disruption this incident has caused and extends its appreciation to the Brisbane community for their ongoing support."
The Queensland Police Service Inspector Daniel Bragg said the man cooperated fully with police and was “very remorseful”.
"I think he was running for the whole time that police were searching for him, which is why it took a while to locate him because he was out and about, travelling at quite a pace,” Bragg was quoted as saying by The ABC.
"He was clearly in the middle of doing some very serious training."
The man justified his actions by saying they were all part of the training exercise.
The man is due to appear in Holland Park Magistrates Court on December 9 after being charged with public nuisance.
A 26-year-old man who was completing a training session has been charged with public nuisance after he was caught by police running with a fake black semi-automatic rifle in Australia.