Police, believed to include armed officers, were involved in an operation in Pembroke Dock on Tuesday evening.
A police dog unit was also at scene at the Coronation School flats at Meyrick Street.
Photographs from the scene showed police vehicles and ambulances.
One resident who lived nearby, told the Western Telegraph: "It's not unusual to have police there but not normally on this level of response.
"It's very worrying what is happening in those flats thse days."
Another, who asked not to be named, said: "The police vans all seemed to arrive at the same time. I'd say it was a raid but nobody is really sure what's going on at the moment."
UPDATE: Wednesday November 8, 10.25am.
Police have issued a statement about the situation: “Dyfed-Powys Police was called to a disturbance at Meyrick Street, Pembroke Dock, at approximately 7pm yesterday.
"A 26-year-old man and a 29-year-old man have been arrested on suspicion of assault and both remain in police custody.”
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