Tekapo residents were alarmed after hearing a loud bang and seeing smoke rise from the military camp this afternoon.
Police and Fire and Emergency NZ were notified of the explosion by a member of the public but were stood down after being reassured the camp had it under control.
A New Zealand Defence Force spokesperson said they were disposing of ordnance at Tekapo Military Training Area this week.
"This involves the use of explosives which may have been heard by the general public."
It was not an exercise, the spokesperson said. However they said operational security prevented them from giving more details about what they were doing and why.