Oakland police say he was arrested on July 22 after a nearly three-week investigation.
OPD says the investigation began when Mistah F.A.B. posted a video on social media claiming he had more than $10,000 worth of fireworks "for the kids."
Investigators say they stopped an originally planned display, but the rapper later set off the fireworks at another location.
During a search, officers say they recovered multiple boxes of fireworks and two guns, including one that had been reported stolen.
According to court records, Mistah F.A.B. has been charged with possession of dangerous fireworks and receiving stolen property.
The Alameda County District Attorney's Office says Mista F.A.B., who's legal name is Stanely Cox, pleaded not guilty. His next court date is Sept. 3.
The case has prompted reactions from community members who described him as a longtime advocate and supporter of Oakland residents.
"I'm shocked he's arrested. He's such a nice guy. He really cares about Oakland. He helps a lot of the community, especially Oakland youth," said business owner Ted Jacob. "They love the guy. I haven't seen anyone in the community that has been done more than he has."
Jules Grace, who operates Uptown Bike Station across the street from Mistah F.A.B.'s business, Dope Era, also praised his contributions.
"He created a lot of jobs for folks; he stimulated the local economy a lot as well as participated in the local identity of the town," Grace said.
Community minister Rev. Harry Williams is executive director of Ground Game Ministries and runs the website www.theogrev.com. Williams was surprised by the arrest.
"I was devastated to hear that news because of what he's done in the community," Williams said. "This man has created scholarship funds. He has given backpack giveaways. He has fed people. He has probably put millions of dollars back into this community...He has paid for funerals. He has sent people to college. I've seen him literally a few weeks ago give someone thousands of dollars to go to college."
Mistah F.A.B. and his attorney did not respond to requests for comment, but the rapper posted a follow-up message on Instagram.
"If I am guilty of anything, it is of serving my community, being a neighborhood hero, continuing to put on community service and creating safe environments for the children and the community," said Mistah F.A.B.
He also said he's thankful to everyone who has supported him.
Williams questioned the decision to arrest the musician and activist.
"He has poured his life into Oakland. For someone who's done so much good in the world to be arraigned to be arrested in a city that's one of the most dangerous places in the whole country -- for fireworks," Williams said.
Oakland City Councilmember Noel Gallo said he respects Mistah F.A.B.'s work in the community but emphasized the importance of enforcing fireworks laws.
"We have the laws in Oakland in place to protect our families and neighbors we need to enforce them," Gallo said. "Doesn't matter what your background, who you are or what relationship you have. You need to adhere to the rules and pay the consequences by breaking the law."
All fireworks, including so-called "safe-and-sane" fireworks, are illegal in Oakland. City officials say individuals caught possessing fireworks can be fined $1,000. State law also prohibits possession of large quantities of banned fireworks.