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The man is seen holding the large knife before being shot by police in the terrifying incident in the Schilderswijk borough of The Hague, Holland.
The shooting on April 12 was not initially widely reported but after the clip surfaced online yesterday (April 20), it quickly spread on social media.
Thousands of viewers have been sharing the video amid rising terror fears in the Netherlands.
In it, the man is heard crying out "Allahu Akbar" – Arabic for God is great – after being shot in the leg by Dutch officers.
The police first fired a warning shot into the air but seconds later hit the man in the leg – leaving him crying out in agony.
A policeman can then be seen kicking the blade out of reach after the man has fallen to the ground.
One of the most popular internet blogs in the Netherlands first published the video, with other Dutch media following suit.
Police said in a statement that they responded to a call of a knife-wielding man after he had destroyed several windows in the area.
When officers arrived, they warned the man to surrender his weapon but he refused to do so.
The man was taken to a local hospital for treatment after he was shot.
An official investigation into the shooting has been launched.
A police spokeswoman from The Hague said they were already aware that the footage had appeared online.
Meanwhile, a gunman carrying an AK-47 killed a Paris policeman after opening fire on cops in a suspected terror attack in France overnight.
A second police officer was said to have been seriously wounded in the attack.