Police say the man - said to be a former employee - entered the Ludlow restaurant in the Southbank area late on Sunday evening brandishing a knife.
Other customers and staff fled but the man cornered the woman in a back room and barricaded himself in.
The area was cordoned off while police negotiated with the man.
The woman was released unharmed in the early hours of Monday.
Police then moved in and Tasered the man before arresting him and taking him to hospital on a stretcher for checks.
Inspector Travis McCarthy told Australian media the investigation was ongoing but that the accused "was fairly disgruntled around some employment issues with the restaurant".
He said the woman appeared not to have been directly threatened during the siege.
A 35-year-old man has been arrested after a woman was held hostage in a restaurant in Melbourne, Australia, for seven hours.