The marine location flare was found on Saturday evening by a member of the public on Meal Beach, south east of the village of Hamnavoe on West Burra.
Police said the unexploded flare was believed to be highly toxic, and cordoned off the beach.
Bomb disposal experts are due to arrive at the scene on Wednesday.
Members of the public have been urged to stay away from the beach until the cordon has been removed and the area cleared.

Karlovic, 35, served 21 aces as the world number one struggled to control his ground strokes in high winds.
In the semi-finals, Karlovic will face Spain's David Ferrer, who overcame Germany's Dustin Brown 6-2 6-2.
Third seed Tomas Berdych from the Czech Republic will face Italy's Andreas Seppi in the other semi.
Berdych saw off France's Richard Gasquet 6-2 6-1, while Seppi enjoyed a 7-5 6-4 victory over Ivan Dodig of Croatia.
But the day belonged to world ranked 27 Karlovic, who recorded his second career win over the Serb having also triumphed at the Madrid Masters in 2008.
Djokovic was nevertheless twice within two points of winning the match in the second set tie-breaker, before dropping serve in the seventh game of the final set.
Karlovic said: "I was feeling good despite the wind. I know he wasn't able to show his full range.
"I was relaxed and didn't feel I had to do anything extraordinary. I just had to focus on my game."

Paulo Dybala and Mario Mandzukic gave the visitors a commanding 2-0 lead at the former Olympic Stadium, now known as the London Stadium.
Andy Carroll pulled a goal back and then headed the equaliser before Simone Zaza hit the winner for Juventus.
West Ham left Upton Park - their home for the past 112 years - in the summer.
They overcame Slovenia's NK Domzale 4-2 on aggregate in their first game at the London Stadium last Thursday to reach the Europa League play-off round.
West Ham's first Premier League game at the venue, which hosted athletics at London 2012, is against Bournemouth on 21 August.
Police have cordoned off a Shetland beach after a "highly toxic" distress flare washed up on the shore in the recent bad weather.
[NEXT_CONCEPT]
Novak Djokovic suffered a surprise loss against Croatia's Ivo Karlovic 6-7 (2-7) 7-6 (8-6) 6-4 in the Qatar Open quarter-finals in Doha.
[NEXT_CONCEPT]
West Ham marked the official opening of their new home with a 3-2 defeat against Italian champions Juventus in front of a 53,966 crowd.