Israeli Prime Minister Ariel Sharon's office said on Thursday that the men were arrested on 7 February and would be charged with severe security violations.
It said they were active members of the "Sons of the Village" group, which has staged anti-Israeli protests.
Palestinians make up about 20% of Israel's population. They are often sympathetic to fellow Palestinians but have played little part in the three-year Intifada against Israel’s continued occupation.
Adalah, a Palestinian rights group in Israel, protested that the brothers had been held for 21 days without being allowed to see a lawyer and said security services had used "illegitimate interrogation methods" like sleep deprivation.
One of the arrested men was accused of receiving more than $10,000 from a Hizb Allah agent to hand over bomb-making instructions hidden inside electrical appliances as well to fund other activities.
Sharon's office said his brother confessed to having links with Hizb Allah.
The Lebanese resistance group spearheaded efforts to oust Israeli forces from south Lebanon following a 22-year occupation in May 2000. The group also holds seats in parliament, runs charities and hospitals.