Police say that a taxi driver picked up a man near Gerrard Street East and Jones Avenue. The man asked the cab driver to be driven to Lake Shore Boulevard West and Thirty-Eighth Street.
Once they arrived, the male passenger attacked the taxi driver with a knife, police say.
Once the driver escaped the taxi, his assailant drove off in the cab.
The taxi driver was found collapsed on the side of the road by a passerby, who called 911 at around 8 p.m. Wednesday.
The suspect abandoned the taxi a short distance away, and was arrested on foot, police say.
The driver, 56, was taken to hospital with serious but non-life threatening injuries to the back of the head and hand.
A woman who lives in the area, named Karen, told CBC News she saw the taxi parked outside and officers scouring the surrounding property.
"It is a shame, it shouldn't be happening," she said. "You hope that everybody's okay and I hope the taxi driver is okay."
An 18-year-old Toronto man has been charged with aggravated assault, assault with a weapon, and robbery in connection with the attack late Wednesday.