The item was found in the water on Sunday by local divers and reported to police.
Cordons were put in place around the harbour and a nearby carpark while army bomb squad officers carried out a controlled explosion on Monday morning.
The PSNI said: "ATO have now finished at the scene and nothing untoward was found."
Initially the device was thought to have been "an old unexploded shell". It is understood it turned out to be a type of training device.
Police said no roads or properties were affected during the security operation.