Police say the device planted near the courthouse on Bishop Street in Derry, was a substantial and viable bomb.
Dozens of elderly residents were moved from a nearby sheltered housing development during the alert, which began at quarter to seven last night.
A number of controlled explosions were carried out on the device.
Traffic and access restrictions remain in place, it's hoped they can be further eased this afternoon.
PSNI District Commander Stephen Martin says the car bomb contained 50 kilos of home-made explosives, packed into a beer keg.
He's blaming dissident Republicans and says it's fortunate there was no loss of life...........
Foyle MLA Martina Anderson says those behind the incident have nothing to offer the city.
The Sinn Fein representitive says for the vast majority of people in Derry, the focus will be back on building for the future as soon as the debris is cleared but the dissidents will still be stuck in the past..........