Indonesian media say one of the arrested is a Singaporean man who allegedly had met Osama Bin Laden, the head of the al Qaeda network, several times.
The nationalities of the other nine men has not been released.
Reports quoted Indonesian anti-terrorism officials as saying the men had planned to target Westerners in the Indonesian capital, Jakarta.
The exact location of the planned strike was not known.
Members of the US and Australian-trained Special Detachment 88 anti-terrorism squad were involved in the raids, police said.
Indonesia has been hit by a spate of attacks blamed on Jemaah Islamiyah (JI), a regional group that has been linked to al Qaeda.
Officials say they believe the nine suspects had ties with Noordin Top, a Malaysian national who is believed to have been the pivotal figure in several JI attacks.
Earlier this year the United States lifted its travel warning to Indonesia, citing security improvements following a spate of arrests targeting suspected JI leaders and fighters.
The last major attack occurred on the island of Bali in late 2005, killing 20 people.