Roads were sealed off by police over the weekend over reports of a "man with a knife".
On Saturday evening officers were called to Sandy Road, in Seaforth, at about 7.30pm to concerning reports.
It was reported a man was at the scene with a knife.
Once officers arrived, a man was found and detained after he was found with "a quantity of suspected Class A drugs."
The force also said the man's hand was injured when they arrived, but the injuries were not life-threatening. He was taken to hospital for assessment after.
Photos from the scene showed three lines of police tape stretched across the road on Sunday morning, close to the former Claremont pub.
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Sheeting appeared to cover part of the cordoned off area, while forensics were seen examining the area.
Several numbered evidence markers also highlighted potential points of interest.
Following the incident, Merseyside Police has referred itself to a force watchdog.
The incident was referred to the Independent Office for Police Conduct (IOPC) after the man suffered a 'medical episode' after he was detained.
The IOPC is tasked with overseeing the police complaints system and to "investigate the most serious matters", its website states.
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Officers remained at the scene on Sunday and Merseyside Police said an investigation was underway.
Sheeting appeared to cover part of the cordoned off area, while forensics were seen examining the area.
Several numbered evidence markers highlighted potential points of interest.
*Anyone with information about the incident is asked to contact Merseyside Police by calling 101 or via Twitter (@MerPolCC) with the reference 977 of February 27. They can also contact Crimestoppers, anonymously, on 0800 555 111.
