A security alert began just after midnight and lasted until 3.15am forcing residents from their homes.
A suspicious device discovered in the area was later declared to be a pipe bomb.
Sinn Fein MLA Raymond McCartney condemned the disturbances and security alert in the Bogside area.
Speaking to the BBC the Foyle MLA said dissident elements in the community were exploiting youths.
In a previous statement, he said: "The damage, disturbances and disruption, which arose from last night's bonfire in the Bogside must be condemned.
"Several families, including elderly people, had to be evacuated from their homes due to a security alert on Charlotte Street.
"This situation was dictated by a tiny group of young people who are being exploited by more sinister elements who are clearly determined to act against the wishes of the local community.
"The scenes around the bonfire were in stark contrast with the excellent finale to this year's Féile which showed the positive community spirit of the people in this area who want nothing to do with the bonfire.
"There was an opportunity to avoid all of these problems through dialogue. Unfortunately that failed because people absented themselves from that process or effectively scuppered it by acting as cheerleaders for anti-community behaviour.
"That process was an opportunity lost and we need to see renewed efforts to avoid a repeat of this situation in the future so the local residents can live in peace.”
DUP Foyle MLA Gary Middleton condemned those who left the pipe bomb in the area, branding them terrorists.
He said: "There were obviously many problems associated with the bonfire that was lit in the Bogside area given its placement in the middle of the main road. It is also important that we can get to a place where we move beyond flags and election posters being burned on bonfires.
"However, the fact that a viable pipebomb was thrown potentially put dozens of lives at risk and is a deeply worrying incident.
"Those who constructed and threw this device are terrorists who clearly have no regard for the lives of anyone in the city. My thoughts are also with many residents who were forced to leave their homes for a number of hours last night.
"We have witnessed too many occasions where such terrorists have held this city to ransom and we must demonstrate that such violence and threat cannot be part of our society."
A gang of young people started piling wooden pallets and tyres at the bottom of the Lecky Road flyover on Sunday night for the August 15 bonfire.
Late yesterday afternoon, after attempts to have it dismantled failed, young people continued to pile the material higher and higher.
It comes after Derry Council issued a removal order to the owner of a derelict site in nearby Meenan Square where pallets had previously been stacked for the bonfire. Police stood by last Thursday as the material was taken away.
After pallets reappeared at Lecky Road, political representatives met the youths in an attempt to persuade them to shift the material away from this major route into Derry. However, they remained adamant that the pyre would not be dismantled.
All day a crowd of youths continued to construct the massive bonfire, while vehicles, including an ambulance answering an emergency call, carefully negotiated their way around it.
Loyalist and unionist flags were nailed to the bonfire on one side while a huge Sinn Fein election poster was embedded on the other by the youths, some of whom were in their early teens.
Resident Teresa Moore said the bonfire was an embarrassment for the area.
"This is an affront to the whole area and we are all being tarred with the one brush, but most of the people around here don't want that in the middle of the road," she said.
"I don't know why they didn't do what they did last year and have it up the banking where it wasn't near houses, blocking roads and caused no bother, but then that didn't get any attention so maybe that's what this is really about."
Foyle MLA Mark H Durkan admitted it was "too little, too late" for this year.
"An ambulance on an emergency call had to slow down and negotiate a path around the bonfire and it managed to do that but once it's lit no ambulance will get past," he said earlier yesterday.
People Before Profit MLA Eamonn McCann said the bonfire should never have been built.
But he added: "If we want to know why the young people involved are doing what they are doing, we have to listen rather than denounce and demonise.
"Young people see that bonfires in loyalist areas appear to be sacrosanct, even when, because of their size, they clearly pose a greater threat to homes and businesses than the Bogside bonfire.
"They conclude that they are being discriminated against and see those who condemn them as complicit in this discrimination."
A spokeswoman for the PSNI said that they were monitoring the situation.