Device placed close to children's play area
Police said a bomb "capable of substantial harm" has been made safe in Co Armagh.
The explosive device and a firearm were found following searches in the Tarry Drive area of Lurgan on Tuesday.
Superintendent David Moore said: “During these searches a number of areas had to be cordoned, and some evacuations were necessary which affected local residents, including children attending a nearby playgroup.
"We are hugely grateful for the patience, understanding and support shown to us by the local community, with whom we are proud to work in rooting out the scourge of terrorism."
Police said the device was examined by the bomb squad before it was made safe and taken away for forensic examination along with the firearm.
"There is no doubt that this device was intended to harm police officers," said Superintendent Moore.
"However its placement and the manner in which it was left undoubtedly mean that had it detonated, it would almost certainly have caused death or serious injury. Working together with the local community, this particular act of potentially lethal recklessness has been brought to an end."
The senior officer said people living in this area were placed at great risk.
"Had this device not been found when it had, there is no telling what we may have been dealing with," he continued.
Misguided individuals behind this device are seriously out of step with this community.
"Young children would have been walking right past this location and people residing peacefully in this area were put in danger. The misguided individuals behind this device are seriously out of step with this community and clearly don’t care about the lives of those living in the area and the disruption they have brought to their doorsteps.
"Placing this device where they did says much about the contempt and disregard in which they hold this community."
The officer added: "As a police service we will not be deterred by such acts nor by the small number of individuals behind them. We will keep doing our job, keeping people safe and tackling the things people in Lurgan are demanding we tackle - burglary, anti social behaviour and drug dealing.
"An investigation, led by detectives from PSNI’s Serious Crime Branch is underway and I would ask anyone who may have information that could assist the police investigation, to please get in touch with us."
"We would like to thank the community and its real leadership for their patience and their response in helping to care for the most vulnerable during this incident – and they are owed more than an apology and explanation by those who recklessly left this device in the heart of this community."
Police can be contacted on 101, or if someone would prefer to give information without leaving their name they can contact the independent charity Crimestoppers on 0800 555 111.