JetBlue flight 191 was headed from New York to Las Vegas when it was diverted to Amarillo, Texas because of the chaos on board.
"He actually started yelling, it's going to blow up, or they going to blow it up," said passenger Serge Kapchits.
Sources tell ABC News the captain, identified as Clayton Osbon of Georgia, began acting strangely while in the cockpit. He was flipping switches and appearing confused, though he was not at the controls.
The co-pilot then tricked Osbon into going into the cabin to check something out before locking the door, changing the security code and calling for help.
Co-pilot: "Amarillo, JetBlue 191 Emergency
Tower: Can you give me a more specific nature of this medical emergency, so I can pass it on to ambulance crew?"
Cell phone cameras were rolling as Osbon became enraged.
"He started banging on the door, kicking in the door, trying to get inside the cockpit," said Kapchits.
The out of control captain was then confronted by passengers, including a group of burly New Yorkers headed to a security conference.
"He started to curse at me and to tell me, 'hey you better pray, Iraq and Iran, so I said you know what. I'm going to show you what Iraq and Iran is and I took him a choke-hold," said passenger David Gonzales.
Passengers say they used their leather belts to restrain Osbon, who, once on the ground in Texas, was handcuffed to a wheelchair and loaded into an ambulance.
The incident comes on the heels of another meltdown involving a veteran American Airlines flight attendant on a Chicago-bound flight.
Professor Joyce Hunter of Saint Xavier University, who worked in the airline industry for more than three decades and authored a book about air rage, says these incidents may reflect mounting stress in an industry plagued by bankruptcies.
"All the airlines are suffering some type of morale problem or possibility of reducing pay, reducing benefits," said Professor Hunter.
JetBlue described the incident as a medical situation.
Osbon is hospitalized. It is unclear if he will face any charges.
All commercial pilots are required to have a medical certificate obtained after screenings and regular follow ups from an FAA medical examiner. And mental fitness tests are part of that screening process.
The FBI and other federal agencies are investigating.