Authorities arrested Buford "Bucky" Rogers, 24, of Montevideo following a raid at his mobile home Friday.
According to court documents, the militia-linked suspect was in possession of Molotov cocktails, suspected pipe bombs, and firearms including a Romanian AK-M assault style rifle.
Officials released minimal details regarding the alleged terror plot but did say the suspected target was the city of Montevideo, a city of about 5,000 people about 130 miles west of Minneapolis.
It was unclear if the suspect was believed to be acting alone or as part of a group.
"This is a very active investigation," FBI spokesman Kyle Loven said Monday. He added that at this point, authorities are "looking at this from a domestic terrorism standpoint."
Loven said the pending investigation prohibits him from getting into details about Rogers' possible political or religious views, but he said the FBI is confident in calling this a "terror" situation.
"We had information which indicated that Mr. Rogers was involved in a plot to conduct terror activities in and around the Montevideo area," he said.
Montevideo, Minn. Police Chief Adam Christopher told ABC News Rogers had started a group called the Black Snake Militia, an organization with anti-government tendencies. Two senior law enforcement sources told ABC News Rogers' targets potentially included local authorities.
The investigation is ongoing. But the FBI believes that the lives of several local residents were potentially saved.
Rogers has since been charged with one count of being a felon in possession of a firearm. The suspect has a past conviction for felony burglary.
ABC News and The Associated Press contributed to this report.