Officers carrying out the search, in response to localised criminal activity, discovered a suspicious object.
This was examined by Army Techinical Officers and declared a viable pipe bomb type device.
The device was made safe and has been taken for forensic examination.
The search concluded at around 8pm.
Detective Inspector David Henderson said, “ I would appeal to anyone with any information about this incident or any criminal activity in the Newry area to contact police in Ardmore on 101.
“Information can also be given anonymously through the independent charity Crimestoppers on 101.”