The investigation began after the ordnance was found in the 1600 block of Copenhagen Drive around 3:30 p.m.
The Santa Barbara County Sheriff's Bomb Squad and Vandenberg Air Force Base's Explosive Ordnance Disposal Team were leading the investigation.
Officials say approximately 500 to 700 residences and businesses near the area were immediately evacuated. The area included the neighborhood south of Laurel Avenue, west of Alisal Road, north of Birch Drive and east of 5th Street.
Sheriff's search and rescue team members went door-to-door to notify residents of the mandatory evacuation, which took several hours.
A bomb squad team removed the military ordnance and rendered it safe shortly after midnight. Evacuations were then lifted.