An 18-year-old man was found in the driveway of a home on Plunkett Street in Woolloomooloo with stab wounds to his arm and leg about 11.45pm, police said.

The victim, who is known to police, was treated at the scene and rushed to St Vincent’s Hospital in a critical condition, where his condition has since stabilised.

A crime scene was set up, and a knife found dumped in nearby Harmer Street was seized for forensic testing.

Following investigations, police executed a search warrant at a unit on Bulwara Road in Ultimo about 4.20pm on Monday.

A 23-year-old man at the property was arrested and taken to Kings Cross Police Station, where he was charged with wounding a person with intent to cause grievous bodily harm, and possessing a prohibited drug.

Refused bail, the man will appear in Central Local Court on Tuesday.

On Monday, Detective Superintendent Leanne McCusker told reporters police believed the attack was targeted.

"The person is known to us and the circumstances we have at this stage, we do believe it is more than likely a targeted attack," she said.