The news comes as the country prepares to vote this weekend in the first round of its presidential election.
French interior minister Matthias Fekl said at a brief news conference that the arrests took place in the southern city of Marseille.
He said the "radicalised" suspects were preparing to strike Marseille "in the next few days".
"The men are suspected of wanting to commit, in an imminent way, a violent action on the eve of the French presidential election," he said.
According to a source close to the probe, the two suspects are aged 23 and 29, and have been taken into custody by French domestic intelligence service agents.
The source said French police had been hunting the pair since the end of last week, seizing them a few minutes apart in the southeastern port city.
A search of a rented apartment has reportedly been made, and the source says the two men appeared to have turned to radical Islam during a term in prison.
France has remained on high alert since a string of terror attacks that began in 2015, which have killed over 230 people.
France goes to the polls to choose a new president on 23 April, with a second round of voting due on 7 May.
Anti-EU, anti-immigration candidate Marine Le Pen has sought to cast herself as the best defender of France against the threat of fresh attacks.
Emmanuel Macron, the 39-year-old pro-European candidate appears to have the best chance of beating Le Pen in a run-off.
While radical leftist candidate Jean-Luc Melenchon and conservative ex-premier Francois Fillon have also gained ground, transforming the election into a tight four-way race.