Officers are outside the building in Burnfoot as part of a search for Kieran McLaughlin.
The PSNI named McLaughlin, 58, as the chief suspect in the brutal murder of Barry McCrory, shot dead in a flat in Derry city centre on Thursday morning.
Police also took the unusual step of issuing a picture of McLaughlin.
Gardai spent today searching Border areas close to Derry in the hunt for the suspect.
Tonight Gardai have surrounded the barn believe and McLaughlin may be there. It follows searches in Muff earlier in the evening.
Officers searched the grounds near the parochial house and several other areas.
The latest search is on the Brae Road between Muff and Burnfoot.
The PSNI raided a number of homes in Galliagh on the Derry side of the Border as part of the operation.
The killing has been widely condemned with British PM David Cameron the latest to denounce the shooting.
He was in Belfast to attend a major investment conference and he took time out at the end of the event to condemn the killing of Mr McCrory and that of 46-year-old Brendan Kearney in Belfast on Wednesday night.
He said: “These murders are despicable and the people responsible should be hunted down prosecuted and convicted, they should face justice.”
The dead man’s family, including his mother Anne, father Danny and son Shea attended a peace rally held in Guildhall Square in protest at the killing.
Following a two minutes silence, the crowd of several hundred were told a clear message needed to be sent out from Derry that violence from all quarters was not acceptable in the city.
Meanwhile, Mr McCrory’s body remains in Belfast where a post mortem examination has taken place. The family hope to have is remains returned to them tomorrow with burial expected on Monday.
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