Police were called by security officials to Trinity Campus just after 9am local time following reports of a masked man dressed in black carrying a gun.
Buildings across the campus and hospitals nearby have been placed on lockdown.
Police are searching the buildings and the surrounding area has been closed.
Toronto Police say the suspicious man is dressed in black and carrying a black rucksack and wearing “what looked like a surgical mask.”
— Saint Camila (@camilacore) June 13, 2016
Trinity Campus is currently under construction and police say a man dressed in black was seen near the building.
A second call claimed the man was holding a gun.
Staff and students have been advised to stay inside as armed police search the campus.
Chief Mark Saunders, from Toronto Police, said: “We’re still in process of clearing three locations looking for report of male dressed in all black with a backpack and mask.
“If anyone has any information to help police locate the man dressed in black with mask at University of Toronto call 416-808-2222.”
Police arrested one man at the scene but officers insist he is not related to the call and was wanted on another matter.
Chief Saunders added: “The person being investigated by Toronto Police near Queen’s Park is not related to the call for suspicious man at the University of Toronto.”
Hospitals near the university, including Sick Kids Hospital and Women’s College Hospital, have also been put on lockdown.
Buildings in the area of Queen’s Park between Bloor Street and Hoskin Avenue remain closed.
For those in the area of #UofT lockdown, please don’t post photos of police locations. We need to do our job safely and efficiently.
— Jeff Bangild (@JeffBangild) June 13, 2016
The university said in a statement: “Please do not enter these buildings. If you in these buildings, please remain in place. Toronto Police are on scene.
“University/ Queens Park Crescent from Bloor to Hoskins is closed. Please do not attend this area. Toronto Police are investigating a suspicious person.”
Police have asked social media users not to post photos of police activity online.
Detective Jeff Bangild said: “Please don’t post photos of police locations. We need to do our job safely and efficiently.
“There have not been any reports of any injuries at this time. One person is in custody but searching continues. Be safe.”
Officers are reportedly escorting people out of the Faculty of Music building and onto shuttle buses.
Police are on high alert following the mass shooting in Orlando on Saturday night.