The unidentified youngster brandished the knife in the middle of the road near a school in the West Yorkshire town.
In the footage the young man can be seen waving around the machete as another youth edges closer to him.
The incident, which took place down New Hey Road, spilled over into the street close to Huddersfield New College.
A woman who witnessed the shocking incident said she believed one of the attackers had managed to land a blow on another youth.
The youth can be seen slashing from side to side to try to get his opponent to back off
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She told the Huddersfield Examiner: "The fight itself happened around 4pm at the entrance to the school grounds.
"They then ran down New Hey Road and back into the school grounds, down one of the alleys and towards Longwood Edge.
"It certainly looked like some blows [from weapons] landed. It wasn’t just a case of them just being waved around.
"The lad in the video is holding a machete. He was taking swipes at the guy opposing him and it did look like he made contact."
The shocked witness said that she saw two people armed with machetes and a third with another large knife in his grasp.
"This would be something you’d expect to see in gangland turf wars, not in a rural town in front of a high school," she added.
The young man can be seen with a massive machete gripped in his hand
This would be something you’d expect to see in gangland turf wars
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"It makes you worry for the future and safety of our children and what kind of world they are being brought up in.
"It makes you wonder what will be next? Shootings in schools? Either way, I will certainly be a lot more aware and cautious of what is going on around our children and our locality."
A spokesperson from West Yorkshire Police told express.co.uk: "We were called to reports of a youth in possession of a knife at New Hey Road, Huddersfield, at around 4.05pm.
"Police were at the scene as officers looked to establish the full circumstances of the incident. There are no reports of any injuries.
"Anyone who has any information should contact police on 101 quoting log number 0999 of January 31."
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