The shooting happened around 1 p.m. near 3rd and Seneca, said Sgt. John Urquhart with the King County Sheriff's Department.
Officials said a man was riding on the 125 route when he began fidgeting with a gun in is bag and it went off.
"Incredibly loud bang, we didn't know what it was," said witness Vaun Raymond. "Somebody said 'Is it a balloon?' Somebody said, 'Is it a firecracker?' "
Raymond said the suspect immediately was trouble.
"He was holding-up the bus and trying to get his friends on the bus -- we're waiting for the green light," he said.
He said the suspect and a woman sat in the back. One block later, he says, the man started fidgeting with something inside his bag and then the shot went off.
Police say the bullet ricocheted through a partition, into a door and grazed another woman's leg.
"There was no screaming and no blood," Raymond said. "But I'm sure it was inches away from a disaster."
Investigators say two King County Transit deputies heard the shot and watched the suspect and a woman run off the bus and into the transit tunnel.
"Seattle police's gang unit responded to the scene and our gang detectives are handling the investigation," said Jeff Kappel with Seattle Police.
The man was placed under arrest while the woman was being held for questioning. Investigators say they're looking in to whether the man was about to shoot someone.
The area around the incident was closed for about an hour for the investigation.