Police were called to Remembrance Driveway at Tahmoor in Camden about 1pm yesterday.
The man was allegedly attempting to stop traffic and enter vehicles while armed with a knife.
Upon arrival, officers found a 33-year-old man lying across the bonnet of a car that was stopped in traffic.
Police said a Taser was drawn and the man was directed to lie on the ground, to which he complied.
There was no discharge of the Taser and the man was arrested and handcuffed with assistance from members of the public.
Paramedics attended and the man was taken to hospital under police guard.
However, police said on the way to the hospital, the man suffered “a significant medical episode”, causing the ambulance to stop by the roadside and provide critical medical attention.
A further two ambulance crews and police officers offered assistance.
Despite efforts to revive him, the man died at Liverpool Hospital a short time later.
A critical incident team from Bankstown Police Area Command will now investigate the circumstances surrounding the man’s death.
The incident is also subject to an independent review by the Professional Standards Command and overseen by the Law Enforcement Conduct Commission.