Two others sought in the probe — an Iraqi man and a Tunisian woman — remained at large, the Interior Ministry in Rome said.
"We're expecting further developments within the next few days and further significant results may well be achieved," said Interior Minister Giuseppe Pisanu, speaking in Brussels.
All five suspects are charged with association with the aim of international terrorism — a charge that was introduced in Italy after the Sept. 11 attacks.
The main suspect is an Algerian believed to be the group's ringleader and a senior operative with links to al Qaeda, Osama bin Laden's terror network.
Abderrazak Mahdjoub, 29, was apprehended in Hamburg, Germany, on Friday morning on an arrest warrant issued in Milan, German police said.
He had already been arrested in the German city in July on suspicion of plotting a bomb attack in Spain, but he was released a few months later for lack of evidence.
"We think he is an Islamic fundamentalist and that he has had a lot of contact with other people with those leanings," a high-ranking police official in Hamburg said on condition of anonymity.
Mahdjoub, who is married to a German woman and has children, has lived in Hamburg since 1991, the official said.
Heino Vahldieck, head of the Hamburg state agency that monitors extremism, said Mahdjoub tried to travel to Iraq at the start of this year, but was arrested in Syria in May and returned to Germany.
The two other suspects were arrested in Milan, the Interior Ministry said. They were identified as Housni Jamal, 20, of Morocco and Bouyahia Maher Ben Abdelaziz, 33, of Tunisia.
The Iraqi suspect is believed to have fled to Syria while the Tunisian woman sought by authorities has most likely gone back to her home country, the ministry said.
A sixth suspect, a man from Tunisia, was arrested Saturday for allegedly providing logistical support to the alleged cell.
The Interior Ministry said a total of 71 people have been arrested this year for their alleged links to Islamic terrorism — up from 64 last year and 33 in 2001.
Many of the probes have been in northern Italy.
Friday's arrests were sought by Milan Prosecutor Stefano Dambruoso, who has won key convictions against al Qaeda suspects picked up in Italy.
In April and March at least seven people had been picked up in Italy on suspicion of helping militants reach northern Iraq or European countries such as Britain and Germany.
Mahdjoub's name emerged in conversations wiretapped during that probe. Investigators said he had contacts with some of those suspects, who were believed to be connected to Ansar al-Islam, an extremist Islamic group based in northern Iraq.
U.S. officials believe Ansar al-Islam has links to al Qaeda.
In Britain, anti-terrorist police arrested a 33-year-old man in the central city of Birmingham on suspicion of involvement in terrorism, police headquarters said Friday. They said six buildings in the city were being searched.
The Birmingham man was detained Thursday and he is being held at an undisclosed police station in west-central England.
Police said the unidentified man was detained under the anti-terrorism legislation provision that concerns involvement in the commission, preparation or instigation of acts of terrorism, but they did not reveal any details about the case.
By Alessandra Rizzo