It was the latest in a series of alleged plots by the Sunni extremists uncovered in Shiite Iran which has been a major supporter of the campaign against them in neighbouring Iraq.
"Eleven people were arrested and the terrorist group dismantled," General Ahmad-Ali Goudarzi, who heads the security forces in the southern province of Fars, was quoted as saying.
"Dozens of cars and motorbikes, as well as 100 kilogrammes of explosives, were seized."
The jihadist group regards Shiites as apostates and has carried out numerous attacks against Shiite civilians in both Iraq and Syria.
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Iran's powerful intelligence and security service have so far managed to shield the country from similar attacks, but they have reported a marked increase in alleged plots in recent months.
In June, the intelligence ministry said it had thwarted a jihadist plot to carry out dozens of bomb attacks across the capital Tehran.
Several other arrests and clashes with militants were reported over the summer.
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