The group said it had dyed the fountains “blood red in a protest against use of crown land for hunting and animal agriculture” during two weeks of events in the capital urging action on the climate crisis.
The Metropolitan Police tweeted: “A number of activists have vandalised the Victoria Memorial water feature outside Buckingham Palace.
“We are on scene and arrests have been made. The suspects are being taken to custody.”
Demonstrators were detained by police officers as they stood in the red water at the monument to Queen Victoria, with some holding flares and signs.
Harley McDonald-Eckersall, a spokesperson for Animal Rebellion, said: “Crown land should be used to grow healthy, nutritious food for all and to provide homes for the animals we share this country with.
“We are demanding that the Queen end the use of crown land for industries which are contributing to the climate and ecological emergency and the death of animals.”
Extinction Rebellion began its Impossible Rebellion protests on Monday and is demanding the Government immediately ends investment in fossil fuels that are driving climate change.
A series of arrests have been made as the environmental group targeted areas across London, including Oxford Circus on Wednesday, bringing traffic to a standstill.
Scotland Yard said a “significant” operation would be in place for the climate protests over the bank holiday weekend but also acknowledged the activists’ “important cause”.