According to a news release, it happened on Sunday at around 1:40 p.m. inside a downtown apartment building.
Police said an argument between three people over money escalated and turned physical. During the fight, a woman allegedly stabbed a man who was demanding to be paid.
The victim suffered a punctured lung and was sent to Guelph General Hospital with serious but non-life-threatening injuries.
Police said the woman was arrested 40 minutes later after she was spotted walking in the downtown core.
A 44-year-old woman has been charged with aggravated assault and was held in custody pending a bail hearing before the Ontario Court of Justice.