Four homes in Glanton were evacuated after police were called to a house in South View on Tuesday evening, after a fire.
A number of what police described as 'potentially hazardous substances' were found inside the property.
The bomb squad was called, the homes evacuated and a 100-metre cordon set up around the village, although this was later reduced to 50 metres.
Earlier this evening, residents were told they could return home and the cordon has been cut back again.
Detective Chief Inspector Jamie Pitt, from Northumbria Police, said: "I want to take this opportunity to thank the members of the public for their patience and cooperation with this investigation, it is greatly appreciated.
"All residents who were displaced have been told they can return home and the 50-metre cordon which was in place has been significantly reduced.
“There is no wider threat to the public and a small number of officers will remain in the area to carry out additional inquiries and to offer reassurance to residents.
“A 17-year-old male who was arrested yesterday remains in police custody at this time.”
Anyone with any concerns is asked to speak to a nearby officer or call police on 101.
A joint investigation with a number of key partners, including the local authority, was launched to identify the substances.