Police then stripped the 44-year-old suspect, wearing an orange jumpsuit, in the street and removed him strapped to wheeled stretcher.
The man - police said may have consumed drugs - was taken to hospital for medical evaluations.
When confronted by other passengers around 8.30pm, he allegedly threatened them with a bottle of what he claimed was a corrosive substance. The contents were found not to be harmful.
The Metropolitan Police urged people to avoid the area, asking pedestrians and drivers to seek alternative routes.
Dozens of officers, including the force’s Territorial Support Group, firefighters and ambulance workers attended the scene. Four double decker buses were pictured parked up on the sealed off road.
One local posted on social media: “I was in Thornton Heath yesterday, thankfully a little earlier and not on this bus. Well done on the speedy arrest.”
Assistant headteacher Anthony Boutall, the Tory candidate for Streatham and Croydon North at the next election, said: “Thank you Croydon police for going into what could have been immense danger on a bus in Thornton Heath last night.
“Although no corrosive material was discovered, I am very grateful to those brave souls who walk towards danger to protect others.”
A Scotland Yard said: “Police responded to calls to London Road, Thornton Heath shortly after 8.30pm last night.
“A man threatened bus passengers with an unknown substance.
“Nobody was held hostage. The man made threats and everyone else on the bus immedi-ately got off. The substance was not thrown.
“Shortly before midnight, the 44-year-old man was arrested for affray. The substance was found not to be harmful.
“Taser was discharged prior to his arrest and officers believe the man had taken drugs.
“As a precaution, he was taken to hospital. His condition is not believed to be life-threatening.”