Five women and nine men including the driver were injured, with some taken to hospital, according to police.
The incident, rare for the city's highly efficient public transport network, occurred around midnight (1600 GMT).
A police spokesman said the driver, surnamed Lo, 23, was being questioned.
News footage from local TV stations showed firefighters at the scene, and one person wearing an oxygen mask while being carried out of the flipped tram on a stretcher.
Images taken by an AFP photographer on site revealed the tram being turned right-side-up shortly afterwards.
Police later arrested a man for arson.
Trams, known as "ding-dings" for the sound of their bells, have serviced the city's main island for more than a century and carry around 200,000 passengers a day.
With around 160 cars, the tram network is the world's largest fleet of double-decker tramcars still in operation, charging a flat rate of just HK$2.30 (30 US cents) for adults to ride along the 120-stop route.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)