A suspect object was discovered in Tamneymore Park, in the Waterside, at about 02:00 BST on Friday.
The device was made safe by Army bomb disposal experts. It has been taken away for forensic examination.
Police said that some houses were evacuated, but that residents have since returned to their homes.
Det Sgt Brian Reid thanked those affected for their co-operation.
"Police are continuing to conduct follow-up enquiries in the area at this time with some cordons in place but no roads closed," he said.
"I would like to place on record my thanks to all those affected by the incident for their assistance during this."
SDLP MLA Mark H Durkan condemned the attack.
"We still have small groups of people here who are trapped in the past and it's up to us to drag them out of the past.
"There is no place for guns or bombs on our streets," he said.
The PSNI have appealed for information.
A device, believed to be a pipe bomb, has been found in Londonderry during an overnight security alert.