At least one person has been injured as a terrifying video showed hundreds of people fleeing the scene.
One witness said her friend had heard people screaming and crying as an explosion erupted.
Many were fearing the worst following the devastating terror attacks in Barcelona, London and Manchester.
“What’s going on on Oxford Street..? Smoke and running,” another asked.
“That moment when you see crowds of people running past your restaurant’s window in horror looking back,” one onlooker wrote.
The popular tourist hotspot is closed off between Oxford Circus and John Lewis with buses on diversion.
“We’re dealing with a small ‘power network explosion’ at 7pm in Oxford St, W1,” a statement read.
“We’re aware of one man with minor injuries. Cordons in place.”
The incident is being investigated by Scotland Yard.