Police and a bomb disposal team were called to Richmond Street, Hartlepool, following the alert that a suspected bomb had been found.
The suspected bomb, which is believed to have possibly been war memorabilia, was found in the loft of a house, off the town's Oxford Road.
Cleveland Police evacuated several homes surrounding the property before a team from Catterick Garrison dealt with the device.
Police say the military squad declared the device was inert.
Officers say the area was evacuated as a precaution after the incident, at around 3.45pm today.
The area has now been declared safe and people have returned to their homes, while police have thanked residents for their co-operation.
A Cleveland Police spokesman said: "At around 3.45pm today, Thursday, January 25, we received reports of a suspected military device being found in the loft of a house on Richmond Street in Hartlepool.
"A number of residents from nearby houses were evacuated as a precaution while we sought expert opinion from military experts.
"Colleagues from EOD attended the scene, examined the item and declared it inert and therefore safe.
"They have removed the item and residents are now being allowed to return to their properties.
"We would like to thank all those affected for their co-operation and patience while the incident was being resolved."