A man who armed himself with a gun and barricaded himself inside a house with a woman and five children has been arrested following a dramatic stand off with police. 

The man, 26, was seen being lead away from the house in Melbourne's north in handcuffs with police confirming the incident was over. 

Heavily armed police remained outside the house at Wedge Street in Epping for almost five hours attempting to negotiate with the man. 

It is believed the man attempted to exit the house at about 2pm on Friday but ran back inside as officers surrounded the property.  

Victoria police spokeswoman Natalie Savino said the man is wanted for arrest as part of an ongoing investigation by the Darebin Crime Investigation Unit. 

A neighbour, who requested anonymity, said residents were in "shock."

"It was horrible because there is a school just across the road from the house and it happened just as school was breaking," she said.  

She said families and young children of St Peter's Primary School witnessed police surrounding the house.

Investigators have so far declined to comment on why the man was being arrested.

Police confirmed there were five children inside the house who were aged from toddler to teenage years but said they were not being held against their will.

It is believed the children and woman were the man's family members.

Police have secured the premises and surrounding area and road diversions remain in place.

Ms Savino said there was no risk to the general public.

In another dramatic turn of events, police on the scene have arrested two people when a violent brawl broke out between three men in a nearby street.

It is not believed this incident is related to the unfolding siege. 

Specialist police including the dog squad and Special Operations Group are at the scene.  

Police also have drones circulating the property in an attempt to gain intelligence of the situation inside the house. 

Police are expected to be on scene for some time.

More to come.