Army technical officers are currently examining a suspicious object found earlier on the Burn Road in Cookstown.
A number of houses and premises have been evacuated.
Police say the security alert is continuing and Burn Road, William Street and Brewery Lane remain closed.
They say that cordon points are in place at William Street, Park Avenue and Burn Road for the public's safety.
They are advising motorists and pedestrians to seek alternative routes.
Local Ulster Unionist Councillor Trevor Wilson said the suspicious object is in the vicinity of the cinema.
"Cookstown is like a ghost town this afternoon," he said. "The fact that this object is close to the cinema where many youngsters go to enjoy the matinee is particularly concerning.
"Businesses are already suffering enough in the town without the like of this on the busiest shopping day of the week."