British Army experts have made safe a 600lb bomb found beside the border in the Forkhill area of south Armagh.
Around 20 people had to leave their homes while the device, which contained homemade explosives, was made safe.
The security alert began last Tuesday when a newspaper received a warning of a bomb having been planted.
The command wire leading across the border was discovered over the weekend.
The PSNI says it was connected to a firing point across the border in Co Louth and the Defence Forces and gardaí have carried out a similar security operation on that side.
Dissident republicans are being blamed for planting the bomb and police have branded those responsible 'reckless'.
The remnants of the device have been taken away for forensic examination and the PSNI has urged anyone with information to come forward.
Minister for Justice Dermot Ahern has condemned those responsible saying 'we spent years negotiating with the British to demilitarise the border. Their actions are anti-republican.'
SDLP Newry and Armagh MLA Dominic Bradley said the bomb could have caused widespread civilian casualty or death.
'This is the most serious threat yet from dissident republicans to the people of south Armagh. Without doubt, there could have been civilian casualties and deaths caused by a bomb of this size.'
Newry and Mourne PSNI commander Sam Cordner said there could have been a devastating outcome to the incident.
He said the actions of what he called terrorist criminals in planting this device had put local people and police officers at significant risk.
The device is the largest found in Northern Ireland in a considerable time.
In January a 300lb device was defused in Castlewellan, Co Down, and in May the components for a another bomb containing around 100lb of home-made explosives were found near Rosslea, Co Fermanagh.