The men, all in their 30s and identified only by initials, were killed in raids late Sunday in the Bali capital of Denpasar and the resort city of Sanur, The Jakarta Post reported.
One suspect was on the police most-wanted list for his alleged involvement in a 2010 bank robbery in Medan in North Sumatra, authorities said.
Police said they learned through surveillance the five men reconnoitered several potential robbery targets, including a money exchange shop and a gold store, the Post said.
The Australian Broadcasting Corp. reported Jakarta police said the terror cell also scouted a popular cafe in the beach area of Seminyak.
Weapons and ammunition were confiscated in the raids, police said.