A man allegedly set fire to a Sydney home and held police at bay in a stand-off on a roof before being arrested.

Police were called to a home in Oakhurst just before midnight on Tuesday after reports a man had barricaded himself in a room. A short while later, smoke was seen coming from the room and the family fled the premises.

The 26-year-old man was then seen on the roof of a neighbouring property, armed with a knife, where he allegedly made threats and threw tiles.

About 1am on Wednesday, the man was arrested when he jumped off the roof. He was taken to hospital under guard, where he will undergo an assessment.

The fire caused moderate damage to a bedroom and no one was injured.