Police said the suspected world war two device had been found at a level crossing near the village railway station.
The army bomb disposal unit arrived at 8pm tonight and identified the bomb as inert.
It was taken away for disposal.
Inspector Andrew Dixon, of Humberside police, said: “The roads and the railway lines are now back open and running as normal.”
He explained: “At 5.45pm today, the police were informed that local people in Nafferton who were digging flower beds for the village in bloom competition had unearthed what they believed to be a world war two style bomb on a grass verge next to Nafferton railway station.
“A photo was sent to the army bomb disposal unit and it is suspected to be a 2lb aircraft bomb.”
The area was cordoned off pending arrival of the bomb disposal unit and trains between Driffield and Bridlington were halted to prevent any vibration in the area.
A villager said: “There’s a tent up and trains have been replaced by buses between Drifield and Bridlington until further notice.
“About half a dozen Nafferton in Bloom stalwarts were digging this afternoon, presumably creating a new garden, and they found it, apparently.”