Residents reported seeing armed police and hearing gunshots in a late-night incident in Dalton.
They reported being woken just after midnight to flashing blue lights on Long Lane, which is between Dalton and Moldgreen. They saw officers searching the area while others reported hearing gunshots.
Police have not confirmed whether a shooting took place but confirmed they are investigating an incident.
A West Yorkshire Police spokesman said: "Police are investigating following an incident on Long Lane, in Huddersfield last night.
"A police scene is in place whilst officers are working to establish the circumstances."
Resident John Woodburn, a retired maintenance engineer for Tesco said: “I was told that there were armed response vehicles on the street”
He said he woke up at midnight due to police lights in his bedroom.
Mr Woodburn said he saw two unmarked police cars and two officers searching the road with large torches.
Other residents said they heard gunshots and at first thought it was 'fireworks'.
A large cordon was in place at the scene this morning but was taken down just after midday.
Officers were earlier seen carrying out fingertip searches and other inquiries.