Police said an army bomb disposal team had been sent to Birmingham's Lee Bank area as a "precautionary measure" as a result of one of the arrests.
Two men, aged 32 and 37, were arrested in the Stoke area of Staffordshire. The other three men, aged 18, 24 and 28, were arrested in Birmingham.
Police said they were all held on suspicion of commissioning, preparing or instigating acts of terrorism.
All five men are being held in the West Midlands.
A number of properties in the Stoke and Birmingham areas are being searched as part of the investigation.
An area outside the Pentahotel on Holloway Head in Birmingham city centre has been cordoned off.
The arrests are "intelligence-led and part of an ongoing investigation", police said.
Veshh Kumar, a concierge at Pentahotel, said: "We had seen police activity since about 12:00 BST then all of a sudden at about 16:00 the bomb squad and the army arrived.
"The police told us to keep all the guests safe indoors. We don't know which building it was or what has taken place."
Five men have been arrested by West Midlands anti-terrorism police.