The teenager has been charged with armed robbery and released on bail.
He will appear in a Children's Court at a later date.
UPDATE 3PM: An employee at Max Bakery and Cafe has told of a very polite armed robber who told her, "I won't hurt you, I just want the money".
The employee said they were approached by a knife-wielding boy about noon today.
There were about four customers in the store at the time.
"He just walked into the store and said to me 'I've got a knife, open the til and give me some money'," the employee said.
"I asked my boss what to do and she said to just give it to him.
"I grabbed a bit of money but it wasn't a huge amount.
"It was pretty scary and I was shaken up but we kept serving customers who were all in a bit of shock too."
The employee said the armed robber had been quite non-threatening.
"He was pretty polite - I didn't think I was going to get hurt," the employee said.
"It all happened so quickly."
The employee said several regular customers had rung up and visited the store to see if they were okay.
"I'm okay now, but people were concerned," the employee said.
UPDATE 2PM: POLICE have arrested a 16-year-old boy following an armed robbery at Max Bakery and Cafe in Strathdale.
The incident occurred about noon today, with several police locating the male at 1.20pm inside a unit on Reception Avenue, located near the bakery.
Crowds gathered when the arrest was made, with about 10 people in the area for an open for inspection scheduled to take place at a unit next door.
Detective Sergeant Steve Rainey said police alleged a boy held up the bakery with a small plastic-handled knife.
"He has asked the staff for a quantity of cash and they have complied," he said.
"He has fled the area and witnesses have come forth, and we also received further information at the police station, which helped us make the arrest."
Detective Sergeant Rainey said the boy had co-operated with police.
"He will now be taken to the Bendigo Police Station and be interviewed by police," he said.
"He produced himself when we arrived at his address and did co-operate when found."
Detective Sergeant Rainey thanked the public for their help in making the arrest.
"We had a number of special services and Bendigo uniformed police who saturated the area and cordoned off the area once the arrest was made."
It is unknown how much money was stolen.
UPDATE 1.23pm: Police have arrested a male in Reception Avenue and are now interviewing him.
UPDATE 1.15pm: Police are continuing their search in Woodbury Street, Strathdale, for a man who held up a bakery in the area.
UPDATE 12.30PM: Police have confirmed the armed robber has stolen an 'undisclosed' amount of cash from the bakery.
Police said no one was injured in the incident.
EARLIER: Bendigo police are searching for a man who held up Max Bakery and Cafe in McIvor Road with a kitchen-style knife just after noon.
Three police units are stationed at the bakery with others patrolling the area looking for the man.
Police said the offender was believed to be a teenager.
Police units are searching streets and businesses around the store.
The offender was wearing a black hoodie and black track pants.
Max Bakery continues to trade.
The bakery sits in a small shopping centre that includes Simonds Real Estate, Russell Parsons Builders and Designers and the Bendigo Weekly.
More to come...