Tim Cartwright, acting police Chief Commissioner for Victoria state, said officers found "improvised explosive devices" in the boy's family home in the north Melbourne suburb of Greenvale after the 17-year-old was arrested in a raid on Friday.
"We do believe the young man intended to explode the device at an event over the coming days," he said. "We will allege he was well advanced in preparing a bomb."
Police in the southern state have been searching the house of the boy, whose identity has not been disclosed, before his appearance in a juvenile court tomorrow.
Cartwright said investigators were at this stage not looking for anyone else in connection with the alleged plot, but they were exploring the possibility of online radicalisation.
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"Overseas recruiters and, more broadly, social media are a real challenge for us, a challenge we haven't seen in the past," Cartwright said.
A woman claiming to be the boy's sister told the today Herald Sun he was just a "keyboard warrior", in response to reports her brother was the alleged author of some online comments that sparked concern.
"That's not my brother. He would not hurt a fly," she told the newspaper.
"He is 17. It is just him being a keyboard warrior, it's not a representation of him at all."
The Herald Sun said a friend of the boy told the newspaper he became "very religious, conservative" over the past year.
Australia raised its threat level to high last September and has since carried out a series of counter-terrorism raids, with alarm fuelled by the departure of more than 100 of its nationals to Iraq and Syria to fight with Islamic State jihadists.