Arresting gardaí had to use pepper spray on the youth after the car in which he was travelling was boxed in by gardaí, including specialist armed units, on the M6 motorway.
It is understood the man, aged 21, was approached earlier at a traffic stop at around 1.20am yesterday.
The man sped off and drove to a house in the Willow Park area of the town, opposite Athlone Institute of Technology.
It is thought he came out of the house with at least one knife and brandished it at gardaí when they arrived.
There were some reports that gardaí tried to pepper spray him, but were not able to get close enough for fear of being stabbed.
Local reports said the spray “knocked him a bit” but that he continued to swing his knife, before getting into his car and driving off.
There were also reports of a domestic incident outside the house with a woman, who had tried to calm the man down.
Senior Garda sources confirmed gardaí had stopped the man who was known to them and he had produced a knife at members, at the estate. But the sources said there was no report a third party had been injured or that pepper spray had been used at that stage.
After the man threatened members with a knife, gardaí called for backup and followed his car as it headed towards the motorway.
Local units, assisted by the regional Armed Support Unit, located the man’s car along the M6.
A controlled stop was conducted and the car was boxed in by the various units.
Gardaí approached the car and the man reportedly became violent.
“He was aggressive and lashed out, but not with the knife,” one source said.
Officers used pepper spray on the man and he was subdued and arrested.
He was taken to Athlone Garda Station and detained under Section 4 of the Criminal Justice Act.
Officers will be in contact with the DPP regarding whether or not to bring charges.
The Armed Garda Support Unit (ASU), which is based in the Westmeath divisional headquarters in Mullingar, was able to respond quickly.
Some gardaí locally made the point that if members had been armed with Taser stun guns, the man could have been incapacitated quickly.
But tasers are only provided to ASUs and the Emergency Response Unit.