Saltburn-by-the-Sea was sealed off by police and the army bomb squad on Monday after they were informed a woman might be armed in the area.
The woman was said to be under watch by armed officers who were "concerned for her welfare".
Police have not yet released information about what the woman was suspected of carrying, but said armed officers and negotiators were in attendance after she was traced to the waterfront.
In a statement Cleveland police said:
"Shortly after 11am on Tuesday 13 March police received information that a woman in Saltburn might have suspicious items on her and became concerned for her welfare."
Police said that army bomb disposal officers were also on the scene, and that Saltburn Bank was closed to traffic.
"Our priority is to bring a safe conclusion to the incident," police said.
North News and Pictures reported that a woman was "face down on the ground as officers covered her with their weapons".
An eyewitness told the news service: "She is sitting on the bench with her hands on her head.
"An armed policeman is pointing a gun at her. There are about four officers that I can see on the ground and they are all by the seafront."
The statement from Cleveland Police read:
Shortly after 11am today, Tuesday 13th March, police received information that a woman in Saltburn may have suspicious items on her and became concerned for her welfare.Suggest a correction
Police have traced the woman to the sea front in Saltburn and are currently speaking to her.
Armed officers and trained negotiators are currently at the scene, as well as other emergency services. Specialist officers from the army bomb disposal unit are also in attendance.
A cordon has been put in place to prevent public access to an area close to the sands and to ensure public safety.
Saltburn Bank is currently closed to traffic and several people who were at business premises in the area were earlier evacuated.
The priority of the police is to bring about a safe conclusion to the incident and enquiries are ongoing.