Officers from the city police's gangs team were on patrol in plain clothes on Wednesday afternoon after receiving tip-offs suggesting that gang members had gathered.
They then arrested 36-year-old Reuben Hudson in Lichfield Street.
Later, a search of a house in Stafford Road uncovered a revolver with bullets in the chamber.
Hudson was charged with possessing a prohibited firearm and ammunition and is set to appear at Dudley Magistrates Court today.
Hudson, from Horton Road, in Telford, is also accused of threatening to shoot a member of security staff at a Wolverhampton bar last Friday.
He will also face a charge of making threats to kill when he appears before magistrates.
Wolverhampton Police Chief Inspector Hasson Shigdar, said: "Our officers acted very swiftly to incoming intelligence there was the potential for disorder and it’s resulted in a lethal weapon being taken out of circulation.
"We always take intelligence and information passed to us seriously and handle it with the utmost confidence. If anyone suspects someone has access to firearms or carries weapons then please tell us so we can take action."
The handgun – believed to be a converted blank-firing revolver – will be forensically examined to determine if it is linked to any shootings.