Fisnik Bekaj, 24, Dale Haziraj, 25, and the alleged leader of the cell, Arjan Babaj, 27, were arrested, while a minor was detained in the operation.
All of the suspects are originally from Kosovo and reside in Italy.
Twelve raids were carried out on homes during the night, including 10 in Venice's historic centre, one in nearby Mestre and one in Treviso to the north.
Police said that they had been monitoring the group since last year and had “identified individuals, relationships, religious radicalisation, and places where they met”.
The prosecutor for Venice said that one of the arrested was overheard in a phone intercept proposing that the group bomb the Rialto Bridge, while a search of an apartment in the city proved that the men were physically preparing for an attack and watching videos on how to carry out knife attacks.
Venice anti-mafia and anti-terrorist units worked in close liaison with Italian police and Carabinieri during the operation, and moved in after "blanket" surveillance of the alleged cell.
Central terror prevention staff, Carabinieri sniffer-dog units, bomb squads and forensics police also took part in the operation, collaborating with special units of Italy's security police.
Venice Mayor Luigi Brugnaro complimented police on a "brilliant operation that has smashed an extremely dangerous group".
Italy has upped security against jihadist groups following the Westminster attack in which a lone wolf killed four people.
