Public prosecutor Francois Molins said police had found automatic weapons after raids in Strasbourg and Marseille and the group was planning to strike on December 1.
Seven suspects were arrested in police raids last weekend following an eight-month investigation by security services, although two were later released.
The other five -- four Frenchmen and a Moroccan -- appeared in court before anti-terrorism judges today, Molins said at a press conference.
"The Strasbourg commando unit, but also the individual arrested in Marseille, were in possession of common instructions... Sent by a co-ordinator from the Iraqi-Syrian region via encrypted applications," added Molins.
Investigators established that the Strasbourg cell was planning an attack on December 1 on one of a number of possible targets, although Molins admitted authorities have so far been "unable to determine the exact one".
The cell's members researched "a dozen sites" online including the Christmas market on the Champs-Elysees, the Disneyland Paris theme park, cafe terraces in the northeast of the capital, the Paris criminal police headquarters and a metro station, a police source said yesterday.
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