The blast occurred just after midnight outside a bank, and follows a series of recent attacks blamed on dissident republicans seeking to undermine hard-won peace in the
It follows a spate of attacks several weeks ago, which targeted army or police workers and was blamed on republicans, opposed to British rule.
"Shortly after midnight, a device in a Corsa car exploded outside a bank at the rear of the DaVinci retail complex" in the city, said a spokesman from the Police Service of Northern Ireland.
"A warning had been received just over an hour earlier and a cordon was in place.”
Evacuations had been carried out in the surrounding area from dozens of houses and a number of businesses.
Derry, which is also known as Londonderry and is the subject of a naming dispute between mainly nationalists, based in the Catholic community, and unionists, based in the Protestant community, witnessed much bloodshed during Northern Ireland's three decades of civil unrest, known as the Troubles.
It was the scene of Bloody Sunday, in which 13 civilians were killed by British soldiers when they opened fire on a civil rights march in 1972.
The violence was largely ended by a 1998 peace deal, but recent attacks have fuelled fears of a return to the Troubles.
Last month, British security services raised the threat level from Northern Ireland-related terrorism.