The attack took place in the early evening, when the 28-year-old is believed to have entered a former hospital in the town of Massow - recently converted into refugee housing - armed with the can of pepper spray.
According to witnesses, the man sprayed dozens of people inside the building with the painful mixture before being overpowered and locked in an empty room, reports the Berliner Morgenpost.
Police were contacted by security men from the complex at 7.30pm.
Emergency services treated around 40 refugees who complained of difficulties with their breathing and irritations in their eyes.
Nine adults and eight children were subsequently brought to hospital as a precautionary measure, with five of the adults being released soon after.
The attacker was employed at a building firm which was working on the site of the refugee home, police said.
Because he was staying at a hotel on the grounds of the same building complex, he had access to the former hospital where 318 refugees are being housed.
The man subsequently tested positive for amphetamine and methamphetamine and was already known to police due to the consumption of illegal drugs.
Police said that at this stage they had no clue as to the motive for the attack.
Far-right party allowed to visit refugees
A court in north-east Germany has ruled that politicians from the far-right National Democratic Party (NPD) are allowed to visit refugee homes after they were banned from doing so by the interior ministry in the state of Mecklenburg-Western Pomerania.
The court rules that the interior ministry's decision was against the constitutional rights of the party's politicians, since the NPD is not an illegal organisation.
The court however ordered that if NPD politicians are to visit refugee homes, the dates must be agreed upon beforehand and they must be accompanied by security personnel to ensure the protection of the homes' inhabitants.