A statement from the U.K.'s Riyadh embassy said the two men, both schoolteachers, were arrested Thursday in the Red Sea port city of Jeddah.
It identified the suspects as American Abdul Latif Ibrahim Bilal and British David Heatin, saying that they had not yet been charged.
The statement added that representatives from the British Consulate in Jeddah visited Heatin and that a team of police officers from Scotland Yard who had arrived in Saudi Arabia was observing the investigation being carried out with the British suspect.
The Scotland Yard investigators last week arrived in the kingdom to brief their Saudi counterparts on the recent arrest of individuals in London suspected of affiliation with "international terrorism." The nationalities of the suspects in London were not revealed.
Western diplomats in Riyadh said the U.S. authorities earlier arrested the two brothers of Bilal, the American schoolteacher arrested in Jeddah, whom they identified as Mohammad and Ahmad Ibrahim Bilal.