On the morning of September 19, 1980, Calloway was arrested in Nashville, Tennessee. He had been a guest in the home of Mary Stagaman, marketing director of the Tennessee Performing Arts Center, after performing there on the 13th. Calloway beat Stagaman with an iron, causing serious head and rib injuries. He then fled into the suburbs of Nashville, where he smashed a plate glass window and storm door at one house and did extensive damage to the interior of another, destroying the family's collection of fine crystal, smashing a television set, and breaking light bulbs with his bare hands.

He also stole a backpack from a first grader, smashed a windshield with a rock, and stole a bag of herbicide from elderly resident Douglas Wright. Calloway spilled it on his body and was rolling on the ground and running around, at which point Wright attempted to hold Calloway at gunpoint and fired a warning shot at him, causing Calloway to dive to the ground and scream that he was shot. He then jumped up and washed his hands and face in the Wrights' birdbath before fleeing the scene, where witnesses reported him wearing only a Superman T-shirt. He was arrested after hiding out in a couple's garage, screaming, "Help! I'm David from Sesame Street and they're trying to kill me!" The actor was taken to a mental hospital for examination. These events were not publicized, and Calloway was allowed to continue appearing on the show as he sought help.

In his authorized history Street Gang: The Complete History of Sesame Street, author Michael Davis writes that Calloway's final years on the show were marked by periods of deteriorating health and ability punctuated by episodes of erratic behavior. During these years, he cites that Calloway reportedly bit music coordinator Danny Epstein during an on-set fight. Davis also states Calloway once appeared unannounced at Alison Bartlett's ("Gina" on Sesame) high school and proposed to her, as he was 23 years Bartlett's senior, plus Calloway's fellow cast members observed subtle clues to his sometimes erratic behavior and they kept their distance. In addition, his criminal record caused him to be banned from Canada, where Follow That Bird was filmed, hence he is completely absent in the film.

where he smashed a plate glass window and storm door at one house and did extensive damage to the interior of another, destroying the family's collection of fine crystal, smashing a television set, and breaking light bulbs with his bare hands.