The PSNI is investigating a possible link between the discovery of a 100lb bomb in Co Armagh on Saturday and the arrest of a man in the Crossmaglen area last night.
The 33-year-old was arrested during a search of a premises in Cardinal O' Fiach Square last night.
British Army technical officers are at the scene and a security operation is ongoing.
The bomb, found packed into a keg on a border road in Co Armagh, is believed to be the latest attempt by dissident republicans to kill police officers.
British army bomb disposal experts removed the device yesterday after a two-day security alert outside Jonesboro in south Armagh.
Police described the bomb, which has been taken away for forensic examination, as a viable device.
Unionist Assembly member William Irwin condemned it as an attempt at murder.
Dissident republicans opposed to the peace process have launched a string of attempts to murder police officers over the last year since a power-sharing government was restored at Stormont.
PSNI Chief Inspector Sam Cordner condemned those behind the latest bomb attempt.
‘Those responsible for planting this device and whose misguided attempts to inflict death, injury and destruction for whatever reason have nothing to offer anyone in our community,’ he said.
Meanwhile, police in Belfast have urged the public to be vigilant and report any suspicious finds after a device found in the north of the city was also described as viable.
A security alert began in the Silverstream Road area on Saturday morning after a suspicious object was found outside a house.
Police and the army were called to the scene and the road was closed while the device was examined.