The Public Security Ministry's announcement marks at least the second claim by Beijing of a terrorist threat conspiracy centered on the August games, both of them linked to ethnic Uighur Muslim separatists in the far western Xinjiang region.
Ministry spokesman Wu Heping provided no photographic or physical evidence, but said the plotters were based in Xinjiang, and were led by a man identified as Abdulrahman Tuersun.
In all, 35 people, including Tuersun and another man, Kuerban Mutalifu, were arrested between March 26 and April 6, Wu said.
"This violent terrorist gang secretly plotted to kidnap journalists, visitors and athletes during the Beijing Olympics in order to make a global impact to sabotage" the Games, Wu told reporters at a rare news conference held at a Beijing hotel. "We face a real terrorist threat."
Wu urged residents to raise their level of alertness and contact police about suspicious people or incidents.
Longstanding resentment against Chinese rule in Xinjiang has fed a simmering rebellion that in the past has included bombings, although little violence has been reported in recent years amid a massive security presence in the region.
Following the 2001 terror attacks in the United States, the communist regime has tried to portray the insurgency as linked to terrorist organizations such as al Qaida. Evidence has often been scant, and some terror experts and overseas law enforcement officials have questioned whether such ties exist.
Nicholas Bequelin, an expert on Xinjiang with the Hong Kong-based Human Rights Watch, said Beijing has undercut its credibility by consistently labeling criminal acts, anti-government violence, and peaceful dissent as terrorism.
"The experience around the world since the launch of the global war on terrorism, has taught the international community how easily threats of terrorism can be manipulated by authoritarian governments for their own purposes," Bequelin said.
Chinese authorities often don't provide evidence to back up their terror claims and allow lengthy time lapses before announcing them. Other claims have drawn heavy skepticism, including a recent charge that supporters of Tibet's exiled spiritual leader, the Dalai Lama, were planning attacks by "suicide squads."
Western diplomats say the government has yet to respond to requests for more information on its claims that an alleged attempt by a passenger to start a fire aboard a flight from Xinjiang last month was a terrorist act.
Most experts say the actual threat to the Beijing Games from terrorism is low, although the event has become a magnet for critics of the government, ranging from free-speech advocates to activists highlighting the crisis in Sudan's Darfur region.
Wu said police confiscated almost 10 kilos (22 pounds) of AN-TNT explosive material, eight sticks of dynamite, two detonators, and "jihadist" literature in the recent raids in Urumqi, Xinjiang's capital.
He said the gang hatched the Olympic plot in November and traveled through Xinjiang last month seeking recruits, including those skilled in weapons and explosives.
They also sought fanatics to carry out suicide bomb attacks in Urumqi and other Chinese cities, Wu said. He didn't say whether any volunteers had been found or whether any attacks were imminent, but said police decided to "neutralize the threat" after collecting sufficient evidence.
Wu also provided further details on another ring uncovered in January, saying they had been manufacturing explosives and were plotting to attack hotels, government offices and military targets in Shanghai, Beijing and other cities.
Wu said 10 men, led by a man named Aji Maimaiti, had been arrested and confessed to acting on orders from a radical Islamic Xinjiang independence group, the East Turkestan Islamic Movement, or ETIM, to prepare attacks targeting the Olympics. East Turkestan is another name for Xinjiang.
While the United States has labeled ETIM a terrorist organization, the U.S. State Department also alleges widespread abuses of the legal and educational systems by the communist authorities to suppress Uighur culture and religion.