The partially-constructed device was discovered during planned searches targeting dissident republicanism, detectives said.
It was found in Lord Lurgan Park in the Co Armagh town on Sunday.
Detective chief inspector Paul Rowland of the Terrorist Investigation Unit said: “Using a public park to store such items is irresponsible and demonstrates a complete disregard for the members of this community, including many families and young children who use this park for recreation.”
Police have launched a series of raids targeting the New IRA in recent days.
The Police Service of Northern Ireland (PSNI) confirmed: “Amongst the items seized for forensic examination was a partially constructed, improvised heavy-duty weapon.”
On Sunday, petrol bombs were thrown at officers during disorder in Lurgan.
The PSNI advised motorists to avoid the Levin Road area of the Kilwilkie estate.
A security alert was raised in the town earlier on Sunday following the discovery of a suspicious device in the Tarry Drive area.
