Two teens are in custody in Halifax, they'll be in court Tuesday. (CBC)

Two teenagers, including one 17-year-old carrying a loaded gun, were arrested after a dispute on the crowded Halifax waterfront on Saturday night.

Thousands of people were in the area, enjoying the International Buskers Festival and waiting for the Halifax Natal Day fireworks to begin when the incident took place at 8:45 p.m.

The incident, between a 17-year-old and a 16-year-old, happened near the ferry terminal and was called in by a witness, according to Sgt. Rob Lowther.

"Our units responded and located the two parties involved. They were arrested, and one of them had a gun and one of them had a knife," Lowther said.

No one was hurt in the incident, but it has made people in the area nervous.

"When I am down here, I like to be with another person so I have a little more backup and not being alone," said Geneva LeBlanc, a food vender who works next to the terminal.

"It makes me a little cautious."

Doug Kraft, a parent and a ferry user, said the incident makes him apprehensive as well.

"There's a lot of people around and it's unsafe for a lot of people; this is a pretty busy spot," Kraft said.

"With having a child in this city, it makes me a little uneasy with him growing up."

The two teens will stay in custody until they appear in court Tuesday on weapons charges. The 16-year-old is also facing a breach of a court order charge.