A viable device was used by dissident republicans in an attempt to murder police officers in Craigavon, the PSNI has said.
Those responsible for the attack have been condemned as "contemptible, deranged and pathetic individuals".
Chief Inspector Barney O'Connor said they received a report of a loud bang in the area of the Tullgally Road at around midnight on Friday.
"A short time later we were contacted by a Belfast based newspaper who reported that a call had been made to them claiming a device had been fired at a police patrol but had missed its target," he said.
"We responded along with ATO colleagues and a suspicious object was located. A full security clearance operation was implemented and this is continuing at present.
"At this stage we believe the device to be viable and that this was an attempt by dissident republican terrorists to murder police officers."
Residents in the area were evacuated from their homes and the Tullygally Road was cordoned off.
Once the security operation is over, police say the device will be taken away for forensic examination.
Chief Inspector O'Connor said it is unclear if the device was fired at a passing patrol or targeted at officers responding to the area following reports from the public.
"I cannot condemn strongly enough those behind this cowardly and despicable act of terrorism. They offer nothing to this community and their actions here do not reflect the wishes of the vast majority of the law abiding residents of this area," he added.
Ulster Unionist justice spokesperson, Doug Beattie, slammed those responsible for the attack.
"It's simple. This is another attempt by republican terrorists to murder police officers going about their lawful duty. These terrorists care little about the people of Craigavon and, indeed, the people of Northern Ireland," he told the Belfast Telegraph.
"These are contemptible, deranged and pathetic individuals who are seeking to drag us pack into the past. I would also reject the term 'dissidents' - these are just violent republicans. Just the same the violent republicans that came before them, trying to force the people of Northern Ireland to bend to their will, but in a different guise.
"They are simply trying to terrorise the people of Northern Ireland and, although they may not have the same capabilities as before, that is still something to be worried about."
Mr Beattie also thanked the PSNI and Armed Forces personnel who responded to the attack.
DUP MLA Jonathan Buckley said the actions of a few "mindless individuals" could have resulted in a scene of devastation.
"Their actions are totally reprehensible and there must be condemnation from all sections of the community towards this behaviour," he said.
"Police officers go out of their homes and put on a uniform to protect our community from harm. For anyone to think that they deserve to be threatened or attacked in such a sinister way like this is clearly morally corrupt.
"Dissident republican activity must be thwarted at all costs. Activity like this should not belong within pockets of our society.
"I pay tribute to those Police officers involved last night and thank them for their service, in such a frightening situation. I hope those responsible face the full weight of the law. Therefore I urge anyone with any details to bring that forward to the Police.”
Sinn Fein MLA John O'Dowd called on those responsible to stop and "let the community here live in peace".
“There can be no place in our society for these type of actions," he said.
“It has also caused considerable disruption to the local community and I have visited the area and spoken to some of those caught up in it.
“Residents were evacuated from their homes after midnight and the security alert is continuing while searches are carried out.
“Those responsible for this incident have nothing to offer the local community or society as a whole."
Anyone with any information regarding the incident has been urged to contact police on 101.
Information can also be provided anonymously to Crimestoppers on 0800 555 111.