A bomb has exploded inside a parked car in the Creggan area of Derry.
Army bomb teams are examining the scene of an explosion that badly damaged the vehicle.
It happened last night outside a house in Carrickreagh Gardens.
No one was injured but homes were evacuated. The road was closed but has since reopened.
Sinn Fein councillor Kevin Campbell said someone had thrown an explosive device into the car.
"While it is not yet known what group may have been responsible for leaving this device, what is known is that this action happened in a built-up area," he told the BBC.
"I would call upon anyone involved in this type of activity to desist. They are going against the will of the vast majority of the people of Creggan who have indicated time and time again that they want to move forward without these types of incidents happening in their community."
A Police Service of Northern Ireland (PSNI) spokesman said: "ATO (Army technical officers) confirmed that a viable explosive device had detonated inside a car parked in the area.
"A number of items have been taken away for further examination."
Nationalist SDLP Stormont assembly member Pat Ramsey said it was a reckless attack.
He warned: "This car was parked adjacent to the front door in a hugely built-up area, and could have killed.
"While there may have been a target last night, the victims were the neighbours whose lives were disrupted when they were forced out of their homes.
"People in the area are telling me that because of continuing difficulties in the Creggan area they are actually considering moving on.
"There is no place for these paramilitary-style attacks in society, and such attacks by dissident republicans are not done in the name of anyone."
Dissidents opposed to the peace process have stepped up activity in recent months, including the pre-Christmas targeting of Belfast businesses and efforts to attack members of the security services.
A device was thrown at a police vehicle in west Belfast recently.
Extremists in Derry have also attempted to bomb the main police station.