The explosive device was found outside an apartment building in the Mánatún area of Reykjavík.
Three men have been arrested in Iceland after a homemade bomb was found in a residential area of Reykjavík.
Police said the explosive device was discovered on Tuesday in a rubbish bin in the Mánatún neighborhood of the capital.
The bin was located outside an apartment building that houses the US ambassador’s residence, but police said they do not believe there is a link.
"A special unit of the National Commissioner of Police was called in and was responsible for securing the site and destroying the bomb," a police statement read.
"Nothing has come to light during the investigation, which indicates that the case is related to the embassy of a foreign state."
Police said two of the three men arrested were on probation and have been sent back to prison. The third was released.
No further details were provided about the homemade bomb, and an investigation is underway.