The Explosive Ordnance Disposal Team was called to attend the scene after the discovery was made at around 3pm on Friday in the canal near the city's railway station.
A spokesman for West Midlands Police said: "We’ve been called after what is believed to be an unexploded Second World War device was discovered in a canal off the Ring Road, Wolverhampton, around 3pm on Friday.
"The area has been sealed off as a precaution and the Explosive Ordnance Disposal (EOD) team have been contacted to attend."
The discovery caused the A4150 Ring Road to be heavily congested – and motorists were urged to avoid the area and find an alternative route.
The bus station was also cordoned off but was back open by 6.30pm.
The delays were affecting Stafford Street, Birmingham Road, Wednesfield Road, Horseley Fields and Bilston Street.
It comes only weeks after a suspected mortar round was found in a Wolverhampton canal. The area around the canal network in Horseley Fields was closed off as bomb disposal experts were called on Easter Monday.
The Explosive Ordnance Disposal team was then called and a controlled explosion carried out.