A 33-year-old man from Newry is being questioned by Gardai after ammunition was found in his vehicle.
Armed police stopped the 4x4 on the M1 near Dundalk, Co Louth, as it was being driven north.
The man was arrested in an area known as Heynestown at approximately 4.30pm on Tuesday.
He is being quizzed at Drogheda Garda Station, where he can be held for up to three days.
It is understood the operation was targeting dissident republican activities in the area.
A small quantity of bullets and a balaclava were recovered in the vehicle, which was seized by gardai.
Forensic officers have examined the SUV for any trace of explosives.
© Press Association