The New South Wales police alleged that the men aged 20, 23 and 30 were planning to carry out a terror attack at one of several prominent Sydney landmarks, media reports said.
Later in the day, the men will be transferred to a court where they will be charged with various criminal offences, Efe news reported.
The 20-year-old is expected to be charged with offences including "one count of acts in preparation for a terrorist act" and "one count of engage in preparations for incursions into foreign countries for the purpose of engaging in hostile activities", the Australian Federal Police (AFP) said in a statement.
The maximum penalty for these is life imprisonment.
"It will be alleged in court that the man had made early-stage preparations and had expressed an intention to carry out a terrorist attack in Australia," the AFP said.
"The man allegedly indicated a range of targets, which included prominent Sydney landmarks and locations, but had not selected a specific target or time to do so," it said, adding that it will also be alleged that the man "had indicated a willingness to travel to Afghanistan to fight" with the IS.
The 20-year-old and the 23-year-old are expected to be charged with being members of IS, facing 10-year jail sentences.
"It will be alleged in court that both men identified as members of Islamic State to other like-minded people. It will also be alleged the (23-year-old) man was prominent in the global online extremist community," the statement said.
"The online environment provides fast and easy access to information and, unfortunately, those benefits are also being exploited by extremists, who use digital technologies to exist 'virtually' if their physical existence is under threat," said the NSW Police Counter Terrorism and Special Tactics Commander, Assistant Commissioner Mick Willing.
The 30-year-old is expected to be charged with fraudulently obtaining Commonwealth unemployment benefits, facing a 10-year prison sentence.
The police said there was no specific or impending threat.
( With inputs from IANS )