The Melbourne men were arrested near Cairns on Tuesday en route to Cape York in the far north of Queensland from where it's believed they were planning to travel to Indonesia, then to the Philippines and on to Syria.
The group had been under surveillance for weeks and all had previously had their passports cancelled and at least some were on terror watch lists.
The notorious Islamic preacher Musa Cerantonio is believed to be among the group that was on Wednesday in custody at an undisclosed location in Queensland, after their arrest while towing the seven-metre fishing boat.
Shayden Thorne, who had previously faced terrorism charges in Saudi Arabia, is also believed to be among the group. He is the brother of hardline Islamist preacher, Junaid Thorne.
The group, aged between 21 and 33, could face charges under the foreign incursion offences.
Authorities refused to detail when the men left Melbourne, although Australian Federal Police assistant commissioner Neil Gaughan has confirmed they had been under investigation for "a number of weeks".
Federal Attorney-General George Brandis, in Townsville, said the men had been arrested shortly after arriving in far north Queensland, and that "authorities had had visibility of these five men for some time".
The arrests demonstrated the threat of Australians engaging in terrorist acts including in foreign countries remained "real and present", Senator Brandis said.
It appears the men may have been days away from reaching their departure point, from where it would have taken days more at least before reaching Indonesia.
But Victoria Police deputy commissioner Shane Patton said authorities had little choice but to move in and arrest the group, also warning of the risk if the men were to return to Australia "combat hardened" with "increased weaponry and explosives skills" and more radicalised.
"I know there'd be people sitting at home saying 'why don't you simply just let them go and take their chance in the waves and fighting in Syria'," he said in Melbourne.
"We have a requirement to ensure that people can't get offshore to go and fight in other countries, can't get offshore to become hardened terrorists and come back here and pose a risk."
"If disruption means ultimately we don't get sufficient evidence so we can charge them, we'll accept that risk."
Deputy commissioner Patton said there was no threat of a terrorism incident arising from the investigation.
Still, he said the alleged plot should not be downplayed.
"This is a serious attempt by five men who have had their passports cancelled in attempting to exit Australia ... ultimately we're investigating the intention to possibly end up in Syria to fight," he said.
Police said the men were "associates" but would not say if they attended the same mosque.
Cerantonio, from Melbourne's western suburbs, was arrested in the Philippines in 2014 after saying he was en route to Syria, and is considered by authorities to be influential among would-be foreign fighters.
He had kept a relatively low profile since his deportation.
Thorne was sentenced by a Saudi court in 2013 to four-and-a-half years in prison on charges including supporting and encouraging terrorism, but was granted clemency in 2014 and deported to Australia.
