The dissident republican group the New IRA is suspected of being behind a car bomb attack in Londonderry.
The attack came shortly after 8pm on Saturday when a vehicle exploded on Bishop Street.
Police and army bomb experts remain at the scene.
Police Service of Northern Ireland Assistant Chief Constable Mark Hamilton said the New IRA was their main line of inquiry.
Two men in their 20s were arrested in the city in the early hours of Sunday by detectives investigating the explosion.
"Our main line of inquiry is against the New IRA," Mr Hamilton said.
"The New IRA, like most dissident republican groups in Northern Ireland, is small, largely unrepresentative, and determined to drag people back to somewhere they don't want to be."
Two men, both in their twenties, have been arrested by detectives investigating explosion outside Bishop Street courthouse in Derry/Londonderry.
— PSNI (@PoliceServiceNI) January 20, 2019
Mr Hamilton detailed how a pizza delivery driver was hijacked on Saturday evening, and his car packed with explosives before being left outside the court house on Bishop Street in Derry.
"We believe that some time after 6pm last night (Saturday), in the Quarry Street area of Derry, a pizza delivery driver was hijacked," he said.
"He had his Ford Fusion car taken off him by at least two armed men.
"Between then and 7.23pm, a bomb was put in that car, driven at least half a mile to outside the court house on Bishop Street and around three minutes later a phone call went in to the Samaritans in West Midlands in England, which was then passed to West Midlands Police who then contacted us.
"In the intervening minutes we had already found the car and started to evacuate the area. At around 8.09pm, the bomb detonated.
"Fortunately it didn't kill anybody and fortunately it didn't cause widespread damage, but clearly it was a very significant attempt to kill people in the local community."
He added they got everyone evacuated "just in time".
"The bomb detonated just as we were leaving the area and it is only by good grace that local people were not killed," he said.
Those evacuated from nearby buildings included hundreds of hotel guests, 150 people from the Masonic Hall and a large number of children from a church youth club.
Earlier fears of a secondary device have been ruled out.
No-one was injured in the attack, which has been condemned by politicians across Northern Ireland's divide.
Mr Hamilton condemned the attack as "unbelievably reckless".
"Thankfully the attackers failed to kill or injure any members the local community out socialising and enjoying the best of what the city has to offer," he said.
"The people responsible for this attack have shown no regard for the community or local businesses. They care little about the damage to the area and the disruption they have caused."
A number of church services in the area have been cancelled due to the ongoing security operation.
STATEMENT: The Secretary of State thanks @PoliceServiceNI and emergency services, and says voices across the political spectrum in are united against intolerable violence in Northern Ireland. pic.twitter.com/79hKZjIWBO
— Northern Ireland Office (@NIOgov) January 20, 2019
Secretary of State Karen Bradley said those responsible would not be permitted to disrupt progress in Northern Ireland.
"The small number of people responsible have absolutely nothing to offer Northern Ireland's future and will not prevail," she said.
"Our voices across the political spectrum are united. This is intolerable violence and we want to look forward and build a peaceful future for all in Northern Ireland.
"Thank you to the PSNI and emergency services who are working so hard to keep people safe and secure."
The mayor of Derry John Boyle challenged those responsible to explain themselves.
"I would actually like to ask the people responsible for this what it actually was that they thought they were going to achieve. It achieves nothing, it didn't achieve anything in the past, it didn't achieve anything right now," the SDLP mayor said.
"This is the past and it has to stay in the past. We don't want to see any more of it."
Colin Neill, chief executive of Hospitality Ulster, said a number of businesses affected by the attack had opened as normal on Sunday.
"We are a resilient bunch in the hospitality sector and this incident last night will not deter us from opening today and getting on with the job," he said.
"We have been in touch with many of the businesses impacted by the situation in Bishop Street and the surrounding area and they have bounced back straightaway, opening for business with normal trading hours and welcoming visitors and tourists back to the city."