The object was found outdoors at an apartment building.
Lasse Brundin, on-call investigation leader at Malmö Police, tells Sydsvenskan that it is "suspected to be a bomb or some other explosive."
The two arrested are suspected of attempted public destruction, the newspaper writes.
Several blocks are cordoned off and residents are advised to stay indoors and away from windows while police bomb disposal experts examine the object.
The alarm about the object came at around 9:30 p.m. on Sunday.
