At one point, he was seen pointing it at children as they fled from their PE lesson on the playing field of Grainville School, St Saviour.
A woman teacher confronted the man after she noticed movement in bushes beside the field and went to check what was happening.
It is believed that she discovered a man in his 20s accompanied by a young boy aged around five at about 12.30 pm. She saw that the man had what looked like a gun.
The teacher, it is understood, confronted the man, who is believed to have been wearing a white hooded top, and told him to leave the area.
She ushered her 30 pupils to safety and raised the alarm. Armed police were called and a hunt began.
A man aged 24 was arrested at his home address at about 3.45 pm after being identified by a member of the public. He was later released without charge pending further inquiries.
