Two aeronautics students planned to use remote-controlled model planes packed with explosives to carry out terrorist attacks in Germany, according to prosecutors.
German authorities are holding two men of Tunisian origin who they say are facing possible charges for the "preparation of a serious, state-threatening act of violence".
Prosecutors say the men are suspected of "procuring information and objects to commit Islamic extremist explosive attacks with remote-controlled model airplanes," prosecutors added.
Police investigating the terror plot on Tuesday launched a series of raids in Stuttgart and Munich in southern Germany and Saxony in the east. They also carried out one raid in Belgium. No-one was arrested.
The suspects had been under surveillance for more than a year and authorities had recently detected "an increased interest in explosives and model aircraft", according to an unnamed security source quoted by a German news agency.
Prosecutors did not mention membership of any specific terrorist organisation and gave no further details about the men under investigation.
However, public broadcaster SWF quoted unnamed sources as saying that the two were studying aeronautics in Stuttgart and were suspected of trying to develop techniques for remotely piloting model planes using GPS technology.
Authorities added that the national terror threat had not been raised, suggesting police believe the alleged plan was in its early stages.
Among the locations raided were the apartments of four acquaintances of the two men who were suspected of financing Islamic extremism, officials said.
The investigation also targeted another acquaintance suspected of money laundering. None of the suspects were identified.
Last November, American Rezwan Ferdaus was sentenced to 17 years in prison over a plot to fly remote-controlled model planes packed with explosives into the Pentagon.
Last year, Spanish police released a video they claimed showed suspected al Qaeda members training for a bombing raid using a model plane.
Germany has seen only one successful attack by an Islamic radical - the fatal shooting of two US airmen at Frankfurt airport in 2011 by a Kosovo native who grew up in Germany and became radicalised by watching jihadist propaganda on the internet.