A bus driver discovered the large bag in the back of a 5-Fulton bus during a routine sweep at the end of the route at the Transbay Terminal, Muni spokesman Judson True said.
The driver notified a Muni supervisor, who called police.
Police dispatched a bomb squad and called the fire department for assistance at 11:12 a.m., fire spokeswoman Lt. Mindy Talmadge said. The terminal is located at First and Mission streets.
Nearby businesses were evacuated and streets were shut down as police examined the bag.
Several Muni routes were disrupted until about 12:15 p.m. when police determined the bag was harmless and streets were reopened, True said.
Police were not available to provide more details.