The incident happened at 1.20pm on Sunday when a man apparently severely injured his own hand with a homemade bomb at a house in Lea Gate, Harwood.
About 40 houses were evacuated "as a precaution" while the house was searched by army bomb disposal experts.
Police also searched two other houses in Tonge Moor.
They said no explosive items were found at any of the addresses.
The injured man was taken to Wythenshawe hospital, but his injuries are not said to be life-threatening.
The 26-year-old, who is still in hospital and said to be in a stable condition, has now been arrested on suspicion of causing an explosion likely to endanger life or property.
Det Ch Insp Sarah Jackson, said: “I appreciate that given the nature of this incident and the impact it had on those living on Lea Gate there will be some concern among residents, but I want to reiterate that this was an isolated incident and there was not and is not any threat to the wider community.
“We are continuing to investigate the circumstances leading up to this incident and if anyone has any information that can assist I would urge them to get in touch.”