The Belfast to Dublin Road is closed due to a suspicious van which has been found in an underpass.
Police had said the vehicle was "cordoned off", but some motorists have been able to get close.
There have also been two hoax bomb alerts in Lurgan.
A number of people were moved from their homes at Francis Street and Castle Lane Mews in the town.
Army bomb experts carried out controlled explosions on two suspect devices, both of which were later declared hoaxes.
The security alert in Newry began shortly before 2300 BST on Thursday after two bomb warnings were received by the Daisy Hill Hospital and a charity.
The dual carriageway is closed in both directions.
Motorists have been advised to avoid both scenes of the security alerts and use the diversions in place.
BBC Northern Ireland reporter Conor MacAuley said that police had told him the suspect vehicle was "extremely well cordoned off".
However, speaking on Friday morning, he said some motorists had still been able to get close to the vehicle.
"There are road closed signs up, there are cones, some signs and lights, but I can't see any police presence at the moment," he added.
"What has happened is that someone has come along and they have moved the cones out of the road and traffic is moving freely up and down past the suspect vehicle.
"I have seen dozens of cars driving past this morning, some of them with small children in the back of their cars doing the school run.
"People obviously don't realise the potential danger they are in."
He said police would be aware of the dissident republican threat in the area.
"It is not long ago that a primed mortar was found on the motorway here which led to the discovery of a bomb-making factory in County Louth," he said.
"Police will be cautious because they will know that if this was called in with very specific details about where this suspicious vehicle was there is always the risk there is the possibility of a secondary device.
"I would say they will move very slowly and this alert could go on for some time yet."
The railway line between Newry and Dundalk has also been closed because of the ongoing security alert.
Passengers are being transported by bus between these stations.
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