A device has reportedly been left at a derelict house in Lurgan.
A number of residents in the Woodville Avenue area have been evacuated from their homes.
Other local people living close to the incident have been told to stay inside.
Detectives investigating serious crime have made a number of arrests.
Searches are also being carried out in the Kilwilke area of the town.
It is believed to be linked to dissident republican activity.
DUP MLA Carla Lockhart has welcomed the action by the Police, “I congratulate the Police for their action on this. The PSNI are sending out a very clear message – terrorist activity no matter what level will simply not be tolerated.
"Nobody wants to see terrorist activity here and this operation in North Lurgan has once again thwarted the aims of those groups who want to drag Northern Ireland back into the past. Dissident activity has no place in this community.
"I urge anyone with any information linked to these searches or dissident republican activity to contact the police.”
David Simpson MP added, “News that dissident activity is continuing to happen in the area is worrying. These individuals have no regard for life and intend to disrupt normal life here.
"The security forces are to be congratulated in their work for uncovering this and I hope they will continue to make significant strides against terrorism here."