Police Chief Vidar Pedersen confirmed that the device, initially described as "bomb-like," was an explosive. It had been defused or neutralized, Censor.NET reports citing ABC News.
Pedersen said the device was found on the street just outside the Groenland underground station, and police swept through the area to remove people from bars and restaurants.
"Every restaurant was being closed," said 23-year-old Malin Myrvold, who witnessed the scene from a fourth-story window.
Police would not give any details about the suspect, or further information about the device.
Norway was put on high alert after neighboring Sweden suffered a truck attack in Stockholm that killed four people and injured 15. The suspect in Friday's attack, a 39-year-old native of Uzbekistan, has been arrested.