Senior Sergeant Anthony Bond said police were called to lower Stuart St at 11.50pm on Monday.
A 24-year-old woman, who was allegedly under the influence of "drugs or alcohol", had taken exception to a vehicle parked in the street.
The woman allegedly smashed the windows and entered the vehicle, going through the glove box where she took a pocket knife and a multi-tool.
Officers found and arrested the woman, who was not known to the owner of the vehicle, Snr Sgt Bond said.
The owner, who asked to remain anonymous, said when confronted the woman said she was "convinced her boyfriend had been sleeping with her aunt".
"She was determined to take it out on my car," the owner said.
The woman told the owner she had been looking for some Zig-Zags — a brand of tobacco paper — in the vehicle, but appeared not to have noticed a 2-and-a-half-year-old German shepherd-cross sitting in the back seat.
"She was damn lucky she didn’t get her face bitten off," the owner of the vehicle said.
"You can imagine what some dogs would do.
"I certainly know a few dogs that would have not reacted very well to something like that happening."
The owner said her dog was well-tempered, but had been whining a lot more following the incident.
The woman seemed "almost apologetic" about the incident, and had hung around the area until police arrived and arrested her.
The front and side windows of the car had been smashed in with a beer bottle, leaving the owner "flabbergasted", "speechless" and "seriously unimpressed" by the event.
The woman appeared in the Dunedin District Court yesterday — which happened to be her birthday — charged with wilful damage and theft, and was bailed to appear at a later date.