Zoo executive director Simon Duffy said one adult lion and four cubs were spotted outside their main enclosure at 6:30am Wednesday - but did not get past the second 1.8-metre fence that separates them from the rest of the zoo.
"At no time did the lions exit that area or exit Taronga Zoo," he told reporters.
"Four of the lions calmly made their way back into their main exhibit and dens and one lion cub was safely tranquillised," he said.
There were no injuries and all the lions were back in their enclosure within minutes.
"They did breach the (first) containment fence. We don't have the exact details of how and why that occurred," Mr Duffy said.
"That is very much a focus of our incident response and the review that will be conducted now."
Zoo staff responded quickly enacting "very strict safety protocols" and "as a result, the situation was under control within minutes", he said.
CCTV footage revealed it was less than 10 minutes between the lions escaping their main exhibit and the emergency response being enacted.
The zoo immediately sounded a "code one" response - warning the emergency involved "a dangerous animal".
"This is a significant incident and a full review is now under way to confirm exactly how the lions were able to exit their main exhibit," Mr Duffy said.
Families sleeping overnight in tents for the zoo's popular "Roar and Snore" program were alerted to the emergency and quickly moved to safety zones.
The zoo, at Mosman on the city's north shore, is open as normal on Wednesday with busloads of school children arriving for excursions.
Opened in 1916, the harbourside zoo stretches over 28 hectares and is home to more than 2600 animals.
