The security alert was sparked in Westlake on the outskirts of Derry city.
It followed the discovery of what police said was a “suspicious object” at around 7 am behind a car in the estate.
Army Technical Officers were tasked to the scene and a number of residents were asked to leave their homes while the object was examined.
Several controlled explosions were carried out before ATO made it safe.
The police say the object was a viable device and residents are being allowed back into their homes.
The device is now being taken away for forensic examination.
Detectives say they are keeping an open mind as to the motivation behind this morning’s alert.
They are appealing for witnesses or for anyone with information that could assist the investigation to get in touch with them.
Officers can be reached at Strand Road CID on 101.
If someone would prefer to provide information without giving their name, they can contact the Crimestoppers charity anonymously on 0800 555 111.