The suspects were detained in and around three Spanish cities - Alicante, Murcia and Granada - and heavily armed police seized computer equipment, drugs and A$56,000 in cash during morning raids.
"The detained were part of a cell that gave logistical support and finance to the Salafist Group for Call and Combat," Interior Minister Jose Antonio Alonso said in a news conference.
The Algeria-based group, also known as GSPC, has declared allegiance to terrorist group al-Qaeda.
The suspects were accused of financing terrorist activities through petty crime, including drug trafficking and forging credit cards, Mr Alonso said.
He said the cell had connections with other European cells in Germany, France, United Kingdom, Belgium and Denmark.
The interior minister, however, sought to emphasise the group was not planning an imminent attack, to assuage fears that Islamic extremists may be designing another attack to follow last year's Madrid train bombings that killed 191 people and wounded some 1,500.
The bombings, Spain's worst terrorist attack, have been blamed on Islamic militants linked to al-Qaeda.
Police raided homes and local businesses in the immigration districts of the three cities.
"The operation is framed within the government's anti-terrorist policy aiming to cut terrorism at the roots," Mr Alonso said.
A judge from Spain's National Court - the tribunal that handles suspected terror cases - ordered the arrests.
TV footage showed police wearing masks in the downtown areas of Alicante and Granada.
The suspects' nationalities were not immediately known as police tried to confirm their identities, an Interior Ministry spokesman said.
The 11 were expected to be taken to Madrid on Saturday to be questioned by National Court Judge Fernando Andreu, who ordered the arrests based on a 10-month police investigation, officials said.
Spain has arrested more than 150 suspected terrorists over the past two years, mostly in connection with last year's train bombings.