Army experts estimated the device, planted outside the village of Forkhill, close to the South Armagh border, contained around 600lb of home-made explosives.
A command wire led from the roadside where it was planted to a firing point across the border.
Dissident republicans were being blamed for planting the bomb.
The Irish army and police mounted a security operation in the Irish Republic while an army bomb disposal expert made the device safe.
The remnants were taken away for forensic examination.
Police launched a major investigation and have urged anyone with information to talk to them.
Sam Cordner, Newry and Mourne police commander Chief Inspector, said: "There could have been a devastating outcome to this incident. The actions of terrorist criminals in planting this device in the Forkhill area put local people and police officers at significant risk.
"Their actions were reckless and dangerous in the extreme Their target may have been the police, but they did not care who they killed or injured.
"It is only through the hard work and professionalism of police officers and their military colleagues that the area has been made safe."
He insisted the actions of those responsible for the device would not deter his officers from providing a service to the people of South Armagh.
"Part of that service will be an investigation into the planting of this device. Anyone who can bring these criminals to justice should contact us.
"We want to thank the people of Forkhill for their patience and forbearance as we worked to make their area safe for them."
The security alert began last Tuesday when a newspaper received a warning of a bomb having been planted. The command wire leading across the border was discovered over the weekend.
Around 20 people were evacuated from their homes while the device was made safe.
SDLP Newry and Armagh MLA Dominic Bradley said the bomb could have caused widespread civilian casualty or death.
He said: "This is the most serious threat yet from dissident republicans to the people of South Armagh. Without doubt, there could have been civilian casualties and deaths caused by a bomb of this size.
"I condemn the actions of these people without question, as the SDLP has in the past always denounced violence or the threat of it. The people who planted this device are not acting for the people of South Armagh, in fact, they are putting the people of South Armagh at huge risk of death. The local people don't want this nor do they want people carrying this out in their area."
Mr Bradley questioned the police response time in dealing with the device and the timing of the evacuation of homes.
"Everybody accepts the dangerous nature of policing this type of threat by the PSNI, however, serious questions must be asked about the response time in dealing with the device and evacuating people from their nearby homes.
"It seems the PSNI may have known about this bomb days before they moved people from their homes and if that's the case then it's certainly cause for much concern," he said.
The 600lb bomb was the largest found in Northern Ireland in a considerable time. In January a 300lb device was defused in Castlewellan, Co Down, and in May the components for a another bomb containing around 100lb of home-made explosives were found near Rosslea , Co Fermanagh.
A 600 lb bomb which was found in Northern Ireland has been defused by a bomb disposal team. A map of the British Isles with Northern Ireland in red.

The bomb was found on the side of a road near the village of Forkhill in County Armagh, Northern Ireland, close to the border with the Republic of Ireland. It was defused by an expert bomb disposal team from the Irish Army. The explosives were home-made and weighed 600 lb (270 kg). It is believed that the bomb was planted there by dissident republicans.

The Police Service of Northern Ireland believed that there could have been a "devastating outcome" — and that they were also potentially targets of the bombers.  Chief Inspector Sam Cordner said: "The actions of terrorist criminals in planting this device in the Forkhill area put local people and police officers at significant risk." 

"Their actions were reckless and dangerous in the extreme. Their target may have been the police, but they did not care who they killed or injured. It is only through the hard work and professionalism of police officers and their military colleagues that the area has been made safe," Cordner said.

20 people had to evacuate their homes while the bomb was safely defused. Authorities took the device and will conduct a forensic examination.