A council worker discovered the grenade in a car park on the town's main street, Banna Avenue, before 9am.

Police were called and took a photo, which they sent to police and army explosive experts.

"We sent it to the bomb squad who identified it as an old grenade," Chief Inspector John Wadsworth from Griffith police said on Thursday morning.

Griffith's Area News said the grenade appears to be a "Mk 2" or "pineapple" grenade commonly used in World War II, the Korean War and Vietnam War.

Defence department Explosive Ordinance Demolition personnel arrived on Thursday afternoon and declared the grenade to be "inert", acting Inspector Luke Cole from Griffith Local Area Command said.

"The device has been secured and they are on their way back to Canberra," he said.

Police had earlier treated the grenade as live and are now investigating how it came to be left on the street.

When it was found, police cordoned off about one-third of Griffith's town centre, including the town's library and several workplaces.

Banna Avenue was closed between Kooyoo Street and Jondaryan Avenue.

Griffith has a population of about 25,000.

The Area News with James Robertson