The duo were detained after they crossed a "security line and aggressively tried to approach the prime minister" who was visiting a mosque in Kuching on the island of Borneo, according to a police statement.
"Both of them were subsequently arrested for failing to comply with police instructions not to cross the security line," read the statement.
The journalists, who work for the Australian Broadcasting Corporation's Four Corners investigative programme were detained yesterday night after the incident but were released today without charge.
Reporter Linton Besser and camera operator Louie Eroglu had approached Najib on the street before their arrest, the broadcaster added.
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Neighbour said their passports, which were initially seized, had been returned to them but they "can't leave Malaysia".
"We will discuss with the Attorney General's Chambers [whether] to charge them," Malaysia's national police chief Khalid Abu Bakar was quoted as saying by local news agency Bernama.
"Police are responsible for the prime minister's security. So we do not want anything untoward happening to him," he said, adding that the journalists were barred from leaving the state while investigations were underway.
Two of Najib's bodyguards were convicted of the murder and sentenced to death.
Najib, who was defence minister at the time, has strongly denied any involvement in the murder and has said he did not know the woman.
But government critics have long alleged that the two bodyguards, members of an elite unit that guards top ministers, were scapegoats in the killing of Altantuya, who was at the centre of allegations of massive kickbacks in the USD 1.1 billion 2002 purchase of French Scorpene submarines.