Residents were evacuated from their homes in Victoria Street in Milnathort, Perth and Kinross while specialist explosives units raced to the scene.
Police said the device was thought to be an “unexploded ordnance device” which was uncovered by workmen carrying out renovations at a house on the road.
A cordon has been set up and it evacuated residents are being offered temporary shelter at a local community centre after being warned they may be unable to return to their homes tonight.
A Police Scotland spokesman said: “Officers are currently in attendance in Milnathort after what is believed to be an unexploded ordnance device was found in the Victoria Avenue area.
“A cordon remains in place while specialist teams examine the item.
“A number of properties have been evacuated as a precaution.”
At least three police vans are at the scene as well as other emergency service vehicles.
Several roads in the area have been blocked by police while specialists examine the suspected bomb.
Scottish Fire and Rescue Service has placed vehicles on nearby roads to assist with the incident.
An SFRS spokesman said: “We’ve been asked to assist the police.
“We’ve got appliances at Stirling Road in Milnathort.”