The handgun was discovered in a bin in an alleyway in John Martin Street in Newry at around 6.30 pm.
This has now been sent for further forensic examination.
Detective Sergeant James Johnston said: “It is reckless in the extreme to leave such an item in a residential area which is frequented by all members of the public, including children.
“Thankfully this danger has now been removed and I would appeal to anyone in the area who knows anything about the circumstances in which this item came to be there, or who has any information about criminal activity in the area in general to contact police in Newry on 101, quoting reference 1019 04/09/18.
“Alternatively, information can also be provided to the independent charity Crimestoppers on 0800 555 111 which is 100% anonymous and gives people the power to speak up and stop crime.”