The 12 were arrested after a grenade attack on a Jewish shop in Paris. Police shot dead the alleged organiser of the attack when he opened fire.
Two suspects were involved in a network for Islamists waging jihad abroad, prosecutor Francois Molins said.
It was the most dangerous terror cell found in France since 1996, he added.
The seven people remaining in custody are expected to appear in court.
Following the arrests, bomb-making materials were discovered at a garage in the Paris suburb of Torcy on Tuesday night.
Mr Molins, the Paris prosecutor, said one of the detainees had acted as a contact for would-be jihadists while the other had travelled to Egypt and Tunisia.
The alleged cell, he said, was the most dangerous to have been dismantled since the Algerian-based GIA.
A number of foreign Islamist militants, including Europeans, have been fighting in Syria on the rebel side, against the government of Bashar al-Assad.
Two Britons, a man and a woman, were arrested this week at London's Heathrow Airport on suspicion of travelling to Syria in support of alleged terrorist activity, and specifically of a role in the abduction of a British photographer there.
The French police raids followed an attack on a kosher grocery in the Paris suburb of Sarcelles on 19 September, in which one person was injured.
The man alleged to have organised the attack, 33-year-old Jeremie Louis-Sidney, was shot dead at his home in Strasbourg on Saturday in an exchange of fire with the police.
An ex-prisoner who served time for drug-trafficking, Louis-Sidney had recently converted to Islam.
Videos recovered from his apartment show him rapping about the 11 September 2001 attacks on the US, and boasting that it was just the start.
Mr Molins said his fingerprints had been found on the remains of a grenade thrown into the kosher grocery store in the Paris suburb.
The bomb-making materials discovered on Tuesday night included potassium nitrate, sulphur, headlight bulbs and pressure cookers, according to Paris Prosecutor Francois Molins.
The French authorities have been on high alert for possible terror attacks after French Islamist Mohamed Merah murdered three Jewish schoolchildren, a rabbi and three paratroopers in and around Toulouse before being shot dead in a police siege of his flat.
French President Francois Hollande has said there will be "total mobilisation of the state to fight all terrorist threats".