Police closed off part of Northgate at its junction with Whitegate on Monday afternoon after reports of a bomb being found.
They say the cordon is expected to remain in place today, Tuesday, while bomb disposal experts work at the scene.
Lancashire Police said: "We were called at around 3.15pm (Monday) to reports an unexploded shell had been found at the White Lund Industrial Estate in Morecambe.
M6, M61 and M55 delays in Preston due to Blackpool Air Show and Lake District holiday traffic
Thunderstorms and heavy downpours of rain predicted to hit Lancashire as Met Office issues yellow weather warning
Two Preston men arrested after serious assault near Harris Museum
Man killed in late night crash on A6 Chorley Road near Blackrod
Lanes reopen after car crash on M6 brings Preston motorway traffic to a halt with severe delays expected
"The shell was uncovered by contractors doing work in the area.
"EOD [Explosive Ordinance Disposal] are en route to the area and a cordon is now in place. We are asking motorists to avoid the area and find alternative routes where possible.
"We will update when the cordon has been lifted."