A police officer's gun was fired in the officer's holster after a scuffle broke out at a Geelong business on Wednesday.

Police were called to G.E.L. Motors in Separation Street, North Geelong, at 9am, after reports of a dispute at a business.

While police were talking to the disputing parties, a man, aged in his 30s, allegedly assaulted another man.

Police used capsicum spray to subdue him but then he turned on police.

 During the "scuffle" police say the man grabbed for an officer's gun and it "discharged in its holster" a police statement said. 

A worker at The Mule Coffee Shed told local radio station K-Rock that staff heard what they thought was a gunshot coming from the mechanic's business next door. 

"All of a sudden we heard a loud crack and the staff turned to each other and said 'that sounded like a gunshot'," the worker said.

He said seven police cars arrived within minutes and then more arrived. Up to 13 police cars were called to the scene, according to K-Rock.