The weapon, which has the appearance of a black iPhone and emits a powerful electric shock, was found after a 14-year-old boy was searched in Manchester city centre.
The officer conducting the search suffered a shock as he examined the fake handset but was not seriously injured, a police spokesman confirmed.
It was discovered after police were called to a complaint that the boy, who has not been named, and three other teenagers were racially abusing a bus driver in Portland Street.
The boy was also found to have a knife, police said.
Greater Manchester Police (GMP) said the fake smartphone has a silver strip along the top with two points from which the current is discharged. The volume buttons appear to activate the device.
Officers believe they are not common in the area but warned people that possession of the item is an offence under section 5 of the Firearms Act 1968.
Four boys, the 14-year-old, one aged 16 and two aged 17, have all been bailed pending further inquiries, a police spokesman said.
The 14-year-old was arrested on suspicion of possessing an offensive weapon, possession of a bladed article and a racially-aggravated public order offence.
The other three were held on suspicion of racially-aggravated public order offences.