Police said they arrested 36 people who were attending military-style training in a jihadist camp in the remote areas of Mount Sumbing in central Java province.
Meanwhile, the country's elite anti-terror squad arrested five more militants from the city of Malang.
The latest arrests come after the government submitted to parliament a raft of new laws tightening the anti-terror operations.
The officials did not specify if the arrested men had links with the terror attack in Jakarta in January that killed seven people.
The arrested men were from Islamic extremist group Jamaah Ansharus Syariah, local media reported, according to Asia One.
Weapons including air guns and knives were taken from the arrested men, as also religious books and flags.
Indonesia has said in recent weeks it busted several terror cells and arrested scores of Islamic hardliners.
Authorities said last week more than 30 radicals, who were planning attacks against the airport and other targets, were arrested.
Also in the last week, police issued an alert against potential use of cyanide in terror attacks.
The country is expecting all forms of terror attacks and that includes cyanide poisoning of military and police personnel, Minister for Political, Legal and Security Affairs Luhut Pandjaitan said, local media reported.
The draft terrorism law submitted to the parliament makes arrests and detentions easier by broadening the definition of terrorism.
"The new definition of terrorism includes the possession, distribution and trade of any weapons ... or potential material that can be used as weapons for terrorism acts," an unnamed source told Reuters last week.
The law also allows police to arrest those who recruit members for militant groups or offer other forms of help to the outfits. Police can also use electronic communications, intelligence reports and financial transactions as evidence in court against suspects.