Published Thursday, 10 April 2014
Police remain at the scene. (© UTV)
The incident happened in the Moat Street area of the city and forced residents from their homes while the fire service tackled the blaze.
Several homes were also damaged as a result of the fire.
It's thought one of the cars was set alight before it rolled down the street and crashed into three parked vehicles.
An eyewitness told UTV: "Once the cars went on fire there was a big blaze.
"PVC doors went up in flames and melted to the ground and windows cracked and broke through.
"It's all elderly and sick people living in those houses.
"It was a terrifying experience."
Sinn Féin councillor Patricia Logue said the attack was "shocking".
"Had this fire spread there could have been dire consequences but fortunately due to the quick response of the fire service this was prevented," she said.
"It was a very frightening experience for local residents.
"Sooner or later we will be looking at a tragedy due to these mindless actions.
"I would appeal to anyone with even the slightest piece of information in regards to those behind this to bring it forward to the police straight away."
It not thought anyone was injured in the incident.
Police have appealed for information.
© UTV News