Henry's distraught owner, Joshua Green, reported him missing after he disappeared from the front of a Newtown Cafe at lunchtime on Wednesday.
"I was completely in shock, I didn’t know what to do or think," Green said.
"I immediately ran out onto King Street hoping he hadn’t got off his leash and been hit by a car. I ended up driving around Newtown for hours looking for him."
Officers searched the local area for the seven-month-old Shar Pei, who was found at the front door of a home not far from the cafe and taken to Newtown Police Station to be reunited with his relieved owner.
Video footage of the reunion shows the puppy, named Henry, bounding through the doors to jump and lick his owners, Emma Aldous and Joshua Green.
Joshua Green wipes away tears of relief as Henry continues to wag his tail.
He said the experience has not left him bitter.
“I have lost no faith in humanity because of this; in fact it’s the opposite. We had thousands of people sharing posts on social media doing everything they could to find Henry.”
He thanked those who had helped in the search for Henry, in particular the police officers who brought about the puppy's safe return.
A 42-year-old man from Camperdown has been charged with larceny and granted conditional bail to appear in court in January.