Bembridge Coastguard Rescue Team are currently at Yaverland Car Park, where officers are preventing members of the public from accessing a section of beach towards Culver Cliff.
Police were first alerted to the potentially explosive situation by a fossil finder yesterday (Saturday) but the Coastguard were only told about the discovery at around 07:20 this morning.
Royal Navy Bomb Disposal experts from the mainland have been alerted to the find and are expected to arrive at the scene later this morning.
UPDATE @ 13:45 – An exclusion zone remains in place around the unexploded device.
Bomb disposal officers are now expected on the Island late this afternoon.
UPDATE @ 16:50 – Royal Navy EOD have successfully carried out a controlled explosion on the grenade, creating a big bang in The Bay.
Both the bomb disposal team and HM Coastguard are now standing down from the incident.