Senior Sergeant Steve Aitken, of Dunedin, said the incident happened about 4pm in the upper Octagon.
Witnesses, who declined to be named, said a 16-year-old male tried to "pick a fight" with a group of about 12 teenagers, and threatened them with two hammers.
"He kept saying he wanted to fight them."
One of the group threw a skateboard at the hammer-wielding youth and ran.
The youth gave chase and hit him on the back with one of the hammers, witnesses said.
Friends of the victim then "swarmed" on the 16-year-old "and started kicking and punching him on the ground.
"It was quite brutal."
Snr Sgt Aitken said no-one was seriously injured.
Three teens, aged 15, 17 and 18, were charged with assault for hitting the 16-year-old with a skateboard.
The 16-year-old was also arrested and charged with assault and carrying an offensive weapon (two hammers), Snr Sgt Aitken said.
"Police will not tolerate loutish behaviour in central city areas where other members of the public could be harmed," Snr Sgt Aitken said.
The three youths are due to appear in the Youth Court on Friday and the 18-year-old in the Dunedin District Court on Friday.
