The PSNI has said a "crude but viable" device was driven into Lurgan police station in Co Armagh last night.
The PSNI believe it is "highly likely" the attack was the work of dissident republicans.
Speaking at a news conference in the town this afternoon, Assistant Chief Constable Ryan Henderson said: "We now know that this was a crude but viable improvised explosive device.
"As unsophisticated as it was, it posed a significant risk to the life of the terrified delivery driver, our security staff and the local community.
"This was a reckless and cowardly attack."
Mr Henderson said a device the size of a briefcase had been placed in the boot of a fast-food delivery driver's car and he was told to drive it to the station or he would be shot.
He said the driver was making a delivery in Deramore Drive in the Kilwilkie area of Lurgan at around 10pm last night "when he was hijacked by two masked men, one of whom was armed with a pistol".
"The men placed an object in the boot of the white Audi A4 car and the driver was ordered to drive it to Lurgan Police Station or he would be killed. The car was driven to the station where the driver escaped and ran to security staff, telling them that there was a bomb in the car.
"A significant policing operation was put in place and continued overnight with around 100 homes in the area being evacuated and residents moved to a local rest centre at Lurgan Town Hall," he added.
He said Ammunition Technical Officers "carried out a controlled explosion to make the vehicle safe".
Mr Henderson said: "I welcome very much the widespread and unequivocal condemnation we've heard from across civic and political society and I'm really grateful for the expressions of support, that I received for our officers and staff involved in this operation.
"I particularly, want to thank the local residents of Lurgan, community representatives and businesses for their patience and support whilst this safety operation has been carried out."
Roads in Lurgan town centre have now reopened, however the police station remains sealed off.
'Reckless act of violence'
The attack has been condemned by Northern Ireland Secretary Hillary Benn.
"I utterly condemn this reckless act of violence, which has forced dozens of families from their homes overnight and put people's lives at risk," he said.
"It shows a callous disregard for the community in Lurgan and my thoughts are with everyone affected.
"There is no place for this in Northern Ireland, and those responsible must be held to account. I would urge anyone with information to contact the police."
Northern Ireland Justice Minister Naomi Long described the incident in Lurgan as a "despicable attack".
She said: "This is a shameful and dangerous attack that has put lives at risk and caused disruption and upset to the local community.
"There is absolutely no place for this utterly reckless and abhorrent behaviour.
"I would like to commend the police officers who responded quickly and professionally to this incident and my thoughts are also with all those who have been caught up by this despicable attack."
Sinn Féin MLA John O'Dowd condemned those behind the incident and said the "actions of those involved stand in stark contrast to the scenes in Lurgan only two weeks ago when thousands gathered to celebrate St Patrick’s Day, with a parade and family fun day."
He added: "Those behind this morning’s actions represent no one but themselves, and stand isolated from the community.
"Progress will not be stymied by these people, Lurgan will continue to move forward."
DUP MP Carla Lockhart described it as "a serious security alert".
"This is an extremely serious and deeply concerning situation for the people of Lurgan.
"It is deeply alarming that a pizza delivery van was reportedly hijacked in Kilwilkie, an object placed in the vehicle, and then driven into the holding area of Lurgan Police Station.
"Public safety must always come first, and I would urge everyone to follow the advice of the PSNI."
Additional reporting PA
