Australian police have staged a series of predawn counterterrorism raids and detained 15 people.
The September 18 raids took place in Sydney, Brisbane, and Logan.
Australian Federal Police Deputy Commissioner Andrew Colvin said some 800 federal and state police officers raided more than a dozen properties across the three cities.
Colvin said, "Police believe that this group that we have executed this operation on today had the intention and had started to carry out planning to commit violent acts here in Australia."
Prime Minister Tony Abbott told reporters the raids came after intelligence showed that Islamic militants were urging supporters to carry out "demonstration killings" in Australia and indicated those detained were connected to the Islamic State militant group that is accused of committing atrocities in Syria and Iraq.
Abbott said, "The exhortations, quite direct exhortations, were coming from an Australian who is apparently quite senior in ISIL (IS) to networks of support back in Australia to conduct demonstration killings here in this country."
Abbott said, "This is not just suspicion, this is intent, and that's why the police and security agencies decided to act in the way they have."
According to Australian media, court documents to be revealed later on September 18 were expected to show the plan involved snatching someone at random off the streets of Sydney and filming them being beheaded while draped in the black flag of Islamic State.
One of the people detained in the raids, 22-year-old Omarjan Azari, appeared in court on September 18 and was charged with conspiracy to commit a terrorist act.
Azari was ordered held in custody until his hearing in November.
Australian authorities raised the terrorism alert level for the country from "medium" to "high" on September 12.
Abbott said on that day, "There are people with the intent and capability to mount attacks here in Australia."
Australia has pledged to send some 600 troops and strike aircraft to join a U.S.-led coalition fighting Islamic State militants in Iraq.
IS militants have killed thousands of people in just the last few months of fighting in Syria and Iraq.
The Sunni extremist group has carried out atrocities against Shi'ite Muslims, non-Muslims, and at times Sunni tribesmen who have resisted the IS.
IS militants have also reportedly enslaved women they have captured, with the UN saying last month it estimated IS had forced some 1,500 women, teenage girls and boys into sexual slavery and Amnesty International releasing information IS had abducted entire families in northern Iraq for sexual assault "and worse."