Emergency services were being tested on their ability to handle a terror attack on a cruise boat in which dozens of hostages are taken.
More than 200 police officers and emergency services personnel including paramedics, firefighters and RNLI workers, were involved in the training.
The challenging exercise emulated a scenario in which terror attackers hijack a boat along the Thames estuary and head down the river towards central London.
It is the first time the Met Police has enacted a live-action, water-borne exercise of its kind.
A sightseeing vessel became the scene of a fierce mock-gun battle between armed officers and police volunteers posing as terrorists shortly after 11am on Sunday, close to the London Docklands area.
Armed officers boarded the moving vessel in a hail of gunfire just over two hours after a simulated hijacking in which a group of around five officers posing as gun-wielding terrorists assumed command of the boat in a role-play hostage scenario.
At least one "body", played by a police volunteer, was cast overboard, and officers were deployed in a bid to assess the effectiveness of rescue operation tactics in life-like conditions.
It was designed to test every phase of the emergency services' effectiveness with a river-based terrorist attack in the capital - from the moment an incident is reported, to the conclusion of a rescue operation.
Photos showed armed police dressed in black racing down the river in speedboats before attempting to board the vessel.
Scotland Yard Commander BJ Harrington, head of the Met's Public Order Command, said the exercise was not planned in response to any "specifc inteliigence" about an impending marine attack.
But he noted that recent terrorist incidents on the continent showed how would-be attackers have diversified their means of inflicting harm to the general public.
He said: "It's important to point out that the exercise has not been designed in response to any specific threat.
"There's no information that we have that we're preparing for.
"Of course, we have seen a number of incidents abroad in the past few years: Nice, Berlin - we have seen different methodologies developing, and, of course, the river runs right the way through London so why wouldn't we prepare for that."
The exercise comes just two weeks after the Met's most senior counter-terrorism officer, assistant commissioner Mark Rowley, revealed that security services have thwarted 13 potential terrorist attacks in the UK in less than four years.
The figure is one higher than the last tally given in October.
Commander Harrington said the exercise marks the first time all the involved agencies have come together to test their interoperability and effectiveness as a group, and hoped it would act as a deterrent to any would-be attackers.
The multi-agency operation was carried out between the Met, the Port of London Authority, London Coastguard, the Royal National Lifeboat Institution (RNLI), London Ambulance Service and London Fire Brigade.
Police posted messages on social media warning the public not to be alarmed if they spotted the training exercise taking place on the river.
The Met's marine policing unit said: "Don't be alarmed if you see our specialist firearms officers on the River Thames who are taking part in the #999exercise today."