Nunavut's Department of Environment says the bear was last seen heading away from the city toward its causeway.
Jaqueline Qaqqasiq said she was shocked to see a polar bear in town.
"We were sitting at the table eating lunch and I saw it running pretty fast down the hill from the Plateau," said Qaqqasiq.
"At first glance we thought it was a dog and we ran to the front of the house and Adam was able to take a couple pics and called RCMP to let them know it was in their parking lot!"
Wildlife officers are monitoring the situation and are asking the public to stay away from the area for their safety and to allow the officers to manage the situation.
"Do not approach the bear. Do not go out to try and find the bear if you hear of a sighting. The work of the conservation officer will be made more difficult if there are people in the vicinity of the bear," the department said in a release Thursday afternoon.
It's the second time this week a polar bear has wandered into the city. On Tuesday, wildlife officers shot an advancing polar bear on the sea ice. It was seen earlier in the day at the Sylvia Grinnell park, a popular fishing and camping spot.