The threat from dissident republicans who attacked MI5's Northern Ireland headquarters is "severe", the police chief constable has said.
Matt Baggott said he was saddened after a car bomb claimed by the Real IRA exploded in Holywood, Co Down - minutes after security powers were transferred from London to Belfast at midnight.
A taxi driver was taken hostage in north Belfast and held for two hours before being forced to drive the device to Palace Barracks near where MI5 is based.
Most of the damage was confined to the perimeter of the base and there were no serious injuries.
Security personnel were evacuating the area when the device exploded and some of the 30 to 40 fleeing residents dived for cover to avoid shrapnel.
Mr Baggott said: "The threat is very severe and there are a significant minority of people who want to take us back to the past in the very worst sense that could bring."
One elderly man was slightly injured in the 12.24am attack after he was walking nearby when the device exploded.
The Real IRA has been linked to a string of attacks against security forces and last year shot dead two soldiers at Massereene Army base in Co Antrim.
The devolution move was agreed in the Hillsborough Castle Agreement brokered in February between the Democratic Unionist Party (DUP) and Sinn Fein.
But while the development will bring a raft of new powers into the hands of Stormont politicians, responsibility for national security and related intelligence-gathering is not to be transferred.
The high-security MI5 facility is therefore the most potent symbol of the security service's continuing role in Northern Ireland.
First Minister Peter Robinson and Deputy First Minister Martin McGuinness insisted the peace process was rock solid and condemned the attack. Irish premier Brian Cowen also criticised the dissidents.
Assembly members went ahead and nominated David Ford as the first Justice Minister for 40 years in Northern Ireland but Mr Baggott said they needed to remain alert.
"I think the feeling today is one of overwhelming sadness that you have a group of people still trapped in their anger, bitterness and rage and their inability to see a way through that," he said.
"They have always had the capability to use violence in this way."
He added: "I think that there are people who simply are unable to move forward. We will continue to confront them doing the right thing."
The chief constable said police had arrested many people and continued to plough resources into the battle.
He added devolution of policing and justice powers represented a great opportunity to have a debate about policing and how they could work more closely together on issues like regeneration and creating a shared future.
"We should be on the edge of something very special indeed in Northern Ireland," he said.
He denied police resources were a serious problem and said they would be putting in more manpower to ensure the people behind the bombing were brought to justice.
Northern Ireland Secretary Shaun Woodward said the dissidents had no support.
"That democratic transition stands in stark contrast to the activity of a criminal few who will not accept the will of the majority of people of Northern Ireland," he said of devolution.
Mr Robinson said: "I have no doubt in my mind that this attack was timed to coincide with the transfer of policing and justice powers. As I have said before, the transfer of powers will not be derailed by those who would return us to the darkest days of our past.
Mr McGuinness added: "Let me be clear however that anyone seeking to obstruct the progress we are making should recognise our determination to deliver a shared society based on respect and tolerance. They will not achieve the destruction of either the peace process or the political process, both of which remain rock solid."