Federal police said they had detained two suspects in Sao Paulo in an operation to "disrupt the preparation of terrorist attacks and secure evidence on the possible recruitment of Brazilians to carry out extremist acts in the country."
Police also executed 11 search and seizure raids in Sao Paulo, Brasilia and the southeastern state of Minas Gerais, they said in a statement.
The Mossad said in a statement it had worked with Brazilian security services and international agencies to "foil a terrorist attack in Brazil," which it said was "planned by the Hezbollah terrorist organization, directed and financed by the Iranian regime."
It said the planned attacks targeted "Israeli and Jewish targets in Brazil."
"This was an extensive network that operated in additional countries," it added.
It did not specify which countries. Security experts have long tracked alleged Hezbollah operations in South America's "tri-border area" between Brazil, Argentina and Paraguay.
"Given the backdrop of the war in Gaza... Hezbollah and the Iranian regime are continuing to operate around the world in order to attack Israeli, Jewish and Western targets," the Mossad statement added.
Brazil is home to around 107,000 Jews, the second-biggest Jewish community in Latin America, after Argentina.
The arrests come just over a month after the Israel-Hamas conflict started when Palestinian fighters surged across the border into Israel from the Gaza Strip, indiscriminately killing civilians and taking hostages.
Israel has retaliated with relentless strikes and a ground invasion of Gaza in a bid to crush the Islamist group, which is allied with Iran-backed Hezbollah.
Citing police sources, TV Globo, Brazil's biggest broadcaster, said the arrested suspects had recently traveled to the Lebanese capital.
It said police had asked Interpol to issue a notice for the arrest of two other suspects with Brazilian-Lebanese nationality who are currently in Lebanon.
Interpol referred questions from AFP to Brazil's federal police, who said they could not give further details on the case.
Anti-terror raids are rare in Brazil, which has been spared from major attacks.
Argentina, home to around 250,000 Jews, was hit by attacks on the Israeli embassy in 1992 and a Jewish center in Buenos Aires in 1994 that killed 114 people combined.
