Mr Dobson said the bomb squad confirmed the grenade was live.
Several members of the public were unaware of the scare and said they were worried the police cordon was in place to contain a gunman on the loose.
Police urged the public to stay away from the area, which included parts of Eastborne St West, Railway Rd, Lyndon Rd West and Market St.
Meanwhile any matters were deferred to the Napier Police Station.
Prisoners at the Hastings station were also transferred to the Napier station.
The bomb squad successfully disarmed the grenade and the station re-opened shortly after 5pm.
The man who took the grenade into the station would not face any charges and there was "nothing malicious" about what he had done.
However, he should not have brought it into the police station. "If people find suspicious packages it's better to call 111 rather than bring it in themselves."
Mr Dobson said the grenade "will be examined by the military and eventually be disposed of".