The discovery was made during a traffic stop around 11:20 p.m. Saturday in the area of Salem Church Road and Old Baltimore Pike.
Police say they ordered a passenger, 22-year-old Keenan White, to get out of the car after they saw him reach underneath his leg to adjust an item in his pants.
When officers patted him down, they found what appeared to be a folding knife in his underwear.
However, they soon discovered it was actually a folding handgun, loaded with five rounds of ammunition.
Investigators say the gun had been reported stolen from a burglary last October in the Llangollen Estates community.
White, of the 600 block of West 9th Street in Wilmington, was prohibited from carrying a weapon due to a previous felony conviction.
He was charged two counts of possession of a firearm by a person prohibited (weapon and ammunition), receiving a stolen handgun, carrying a concealed deadly weapon, and possession of marijuana.
White was arraigned and released after posting $7,500 secured bail.
