The bomb was discovered on the day the Ulster Unionists, members of the leading Protestant party that supports power sharing with Catholics, were to hold an internal vote on whether to accept a British government plan to resolve the crisis.
A moderate faction led by David Trimble seeks to accept the deal, which calls on all paramilitary groups to disarm. He is opposed by hard-liners, who have often sought to end his leadership.
The Northern Ireland assembly, in which Catholics and Protestants share power, is currently suspended because of a dispute between unionists and IRA-linked Sinn Fein over IRA disarmament. The IRA has put some of its weapons out of use but has not disbanded as a paramilitary organization.
Sinn Fein has argued that Protestant militias also retain their arsenals.
The two men who were arrested, aged 24 and 33, were arrested Monday at their homes on the predominantly Catholic west side of the city, police said. The pair could be interrogated for up to a week before being charged or freed.
Police said they spotted the van moving suspiciously on Londonderry's Foyle Bridge on Sunday, then found the vehicle abandoned by a roadside on the city's predominantly Protestant east side. They weren't certain yet what the intended target was.
British army experts dismantled the bomb inside, which involved two drums filled with fertilizer-based explosives connected to a detonator and timer.
Two IRA dissident groups have been mounting attacks for years in hopes of upsetting IRA cease-fires and undermining Sinn Fein.
The Continuity IRA began bombing Northern Ireland targets in 1995 during a previous IRA cease-fire, while the Real IRA was founded after the IRA called its current truce in 1997.
Police haven't specified which faction was believed responsible for Sunday's thwarted attack. The Continuity IRA has claimed responsibility for most dissident violence in the area, but the Real IRA was responsible for the most recent fatality: a Protestant construction worker killed last August when a booby-trapped lunch box blew up at a Londonderry army base.
Anti-terrorist intelligence agencies in Northern Ireland and the Irish Republic say the two groups, which number no more than 150 men, cooperate on many activities, particularly on smuggling weaponry, cigarettes and fuel. Both groups reject the Good Friday peace accord of 1998 because it maintains Northern Ireland's status as British territory.
The Real IRA committed the deadliest terrorist strike in Northern Ireland history in August 1998, with a car bomb in the town of Omagh that killed 29 and wounded more than 300.
Since then police in both parts of Ireland have kept the dissidents under tighter surveillance and put several key figures behind bars.