A police spokesman said the leader of the Jamayetul Mujahideen Bangladesh (JMB) group, Abdullah Al Tasnim, and six others were arrested early today in raids in Dhaka.
"Tasnim has established communication with the Middle East's ISIS Islamic militants," Monirul Islam told AFP.
"We have arrested him and his aides early today."
The Islamic State group is widely regarded as the most violent and powerful organisation in modern jihad and has captured large swathes of territory in Iraq and Syria.
More From This Section
The JMB was highly active around 2005 when it set off hundreds of bombs nationwide between August and December.
It was also involved in spate of bombings on judges and courts, but had been relatively quiet since the then government launched a crackdown on the group and prosecuted more than 1,000 of its members.
In 2007 an army-backed government hanged six JMB members, including its founder and leader Shaikh Abdur Rahman and his deputy.
But the organisation is since believed to have regrouped. In February attackers ambushed a prison van in northern Mymensingh district and snatched three convicted JMB militants after killing a police officer.