One bomb detonated and another left at the scene close to offices of the Probation Service in Derry’s Crawford Square
Both devices are believed to have been improvised home-made pipe bombs.
Police responding to the incident believe they were the targets of an attempted trap but the second bomb failed to explode.
A number of people have to be moved from their homes.
Residents of nearby Conar’s Court said they were left terrified by the terror attack.
“Those responsible are imbeciles and clowns,” said one young mother.
“The blast woke my child and she was up all night.”
The PSNI said a number of people were evacuated from their homes.
The security operation in the area is continuing – with traffic disruption as a result.
Police closed off the Northland Road and Academy Road last night after the blast with fire crews and ambulances on stand-by at the scene.
The bomb exploded shortly before 11pm, said police who have condemned those responsible for the disruption.
Officers have warned the follow-up operation is continuing and may last into daylight hours.