Prime minister Malcolm Turnbull said security had been increased at Sydney Airport since Thursday because of the plot.
The measures were extended to all major international and domestic terminals around Australia overnight.
"I can report that there has been a major joint counter-terrorism operation to disrupt a terrorist plot to bring down an airplane," Mr Turnbull said.
Australian Federal Police commissioner Andrew Colivn said details were scant on the specifics of the attack, the location and timing.
"We do believe it is Islamic-inspired terrorism. Exactly what is behind this is something that we will need to investigate fully.
"At this time we don’t have a great deal of information on the specific attack, the location, date or time. However, we are investigating information indicating that the aviation industry was potentially a target ..."
Mr Turnbull advised travellers in Australia to arrive at airports earlier than usual - two hours before departure - to allow for extra security screening, and minimise carry-on baggage.
Justice minister Michael Keenan said the plot was the 13th significant threat disrupted by police since Australia's terror threat level was elevated in 2014.
"The primary threat to Australia still remains lone actors, but the events overnight remind us that there is still the ability for people to have sophisticated plots and sophisticated attacks still remain a real threat," Mr Keenan said.
The operation was carried out by the Australian Federal Police, New South Wales state police and the Australian Security Intelligence Organisation, the country's main domestic spy agency.