The police did not reveal the identities of the two men but only gave their initials, N.V. and T.F.
The police confirmed that they had arrested the 33-year-old N.V. in downtown Zadar at 2310 hrs Sunday and the 32-year-old T.F. in the nearby town of Obrovac a half an hour later.
The suspect with the initials N.V. was carrying an explosive device which should have been planted under a car when he was arrested.
Zadar police chief Anton Drazina said that they had prevented the suspects from committing a serious act of terrorism which could have had far-reaching consequences.
The local prosecutor Ivan Galovic said that the suspects had intended to plant the explosive device in the densely-populated centre of Zadar, which was why the crime was described as an attempted act of anti-state terrorism.
He added that he did not rule out the possibility that this could be part of fighting among mobsters.
According to the police report on Sunday's apprehension, the 33-old suspect was behaving suspiciously while walking along the Street of Zadarskog Mira in downtown Zadar. He tried to flee when he spotted police officers, but was caught and taken to a police station. The other suspect, who had driven the first man to the street in a car, fled the scene in his Fiat Punto. He was later stopped in the area of Obrovac and taken to a police station.
The two suspects, who already have criminal records, were brought before an investigating judge.
Both men hold Croatian passports but they stay in another country from time to time. The suspect identified as T.F. has served a 14-month sentence for drug abuse in that other country, the police reported.
Zadar police said they still had no knowledge of whether the two belonged to the so-called Zemun mobster gang in Serbia, as speculated by the media.
The police ruled out that the suspects were planning to activate the explosive on a ferry sailing from Zadar to the Italian port of Ancona.