The operation started at lunchtime on Tuesday, when police closed the A37 Concession Road in Crossmaglen, south Armagh.
This is the main route from Castleblayney to Dundalk.
The alarm was raised after police received a report that a device had been left at a property in the area.
It is understood the home formerly belonged to Real IRA member turned MI5 agent Declan Gregory.
A group calling itself The Irish Volunteers claims it left the device.
A police spokesman said officers were aware of the report and their inquiries were continuing.