The group, which had 24 members, also recruited Moroccan citizens to send them to conflict areas including Afghanistan, Iraq and Somalia, state news agency MAP cited the Interior Ministry as saying.
Four members had previously served jail terms for terrorism offenses, according to the ministry.
It said the group's members would appear before a judge when the police investigation ends but did not clarify whether they had been formally charged.
The group's members "were preparing to carry out assassinations and acts of sabotage within the country, notably targeting the security services and foreign interests in Morocco,” the ministry said in a statement carried by MAP.
It said they were carrying a pistol and ammunition taken in an attack on a police officer in Casablanca, as well as knives.
Islamist-linked violence is rare in Morocco, a staunch Western ally with a reputation for stability that has helped entice millions of tourists.
The security services say they have rounded up more than 60 radical cells since 2003 when a chain of rare suicide bombings killed 45 people in the economic capital Casablanca.
The Moroccan government carried out mass arrests after the Casablanca bombings but in recent years has shifted to more targeted surveillance that security experts say is yielding valuable information for European intelligence agencies.
Moroccans have been among those involved in bombings or planned attacks on continental Europe including the 2004 Madrid train blasts that killed 191 people and wounded 1,700.
Some 1,000 Islamic militants are now held in Moroccan jails, many of them after trials slated by defense lawyers and judicial reform campaigners as unfair and based on flimsy evidence.
The government says only genuine criminals are imprisoned and on solid information.
