The driver took a man from Wollongong to Kiama in the early hours of Friday morning, police said.

At Kiama, the passenger produced a weapon, threatened the driver and stole the taxi.

The vehicle was later found abandoned on Swamp Road at Jamberoo.

Lake Illawarra duty officer Inspector Paul Allman said anyone who may have seen suspicious activity along Swamp Road on Friday morning should call Crime Stoppers on 1800 333 000.