Police rushed to Oxford Circus station in the midst of rush hour on Friday evening following reports of gunshots.
Pictures and video showed people fleeing the scene and taking shelter in nearby shops.
Officers sealed off the surrounding area and closed Bond Street station as a crowd control measure while armed police responded to the reports.
Police later said there was no evidence that shots had been fired.
The station reopened just over an hour after police were first called. Witnesses had reported seeing smoke.
The Metropolitan Police said it had responded as if the incident was terror-related but later announced it had "not located any trace of any suspects, evidence of shots fired or casualties".
One woman sustained a minor injury while fleeing the station, British Transport police said.
Three fire engines and 15 firefighters were dispatched to the scene.
Witnesses reported people fleeing the scene in tears, screaming. Some suffered panic attacks amid the confusion about what was happening.
Many posted pictures from the scene on social media.
Other posted video of the incident.
