The militants identified to be Javed Ahmed and Ashiq Ali were arrested in Central Delhi's Daryaganj locality around 11 pm.
Sources say that they were planning to launch an attack in the capital ahead of the upcoming Independence day but refused to give further details.
The police have reportedly recovered two AK-47 rifles, two grenades and around 100 cartridges. The nationality of the militants who are in their early thirties is still unknown. However a senior police official said they appeared to be Indians.
Responding to tip off about possible terror strikes, specialised units like Quick Reaction Teams, Special Weapons and Tactics (SWAT) and Vajra (of the Rapid Action force) are being deployed at the capital. The forces are also reviewing arrangements at the Red Fort, where Prime Minister Manmohan Singh will unfurl the flag on Aug 15.