Authorities said Mos Def and his entourage pulled up in a flatbed truck for an unscheduled show for the audience gathered outside, MTV.com reported Friday.
An NYPD spokesman said officers asked Mos Def to shut down the show for public safety.
It isn't clear whether Mos Def, real name Dante Smith, ignored or refused the orders, police said.
The rapper was performing "Katrina Clap," a freestyle indictment of the Bush administration's slow response to last year's hurricane in New Orleans.
"Mos Def was unjustly arrested tonight while performing on a flatbed track in New York City outside the Video Music Awards," said publicist Carleen Donovan. "Mos Def was not out to break any laws. His only goal was to heighten the awareness of a serious situation that still exists in our country. He does not want people to forget that although it's one year later, the people and cities hit by the hurricane still need the help of the American people."
The incident was caught on tape.