Armed police were called after reports of gunshots on Monday afternoon.
Residents in Tonypandy described hearing "loud bangs" in Court Street just after lunchtime.
Many were scared to leave their homes after they what they believed were gunshots and reportedly saw a man flee along Court Street and later into Oak Street in nearby Clydach Vale.
Rebecca Burge was with her two children when she heard the bangs and said armed police and a helicopter arrived soon after. Ms Burge said on Monday afternoon: "There are armed police trucks and helicopter circling around the forest behind me."
Police arrested a 32-year-old man in connection with the incident and confirmed nobody had been hurt.
Councillor Mark Norris, who represents the Cwm Clydach ward, said he had spoken to police who had told him it was a "domestic issue" involving a confrontation.
"Someone reported hearing shots and so the armed police were called out," Cllr Norris added.
A spokesman for South Wales Police confirmed officers were called to Court Street, Tonypandy, just after 1pm on Monday, March 30.
They said: "A 32 year-old man was arrested shortly after and is currently in police custody in connection with the incident.
"There have been no reported injuries. An investigation is under way. Armed officers responded as a precautionary measure.
"Information we received was that a firearm may have been involved. No firearm has been recovered as of yet."
Anyone with information is asked to contact 101 quoting reference *107782.
