Gendarmes, backed up by a special unit of police, conducted a major operation in the centre of Ambérieu-en-Bugey, near Lyon, on Wednesday evening, according to the local paper Le Progrès.
They seized jihadist propaganda and flags that appeared to show allegiance to IS, the paper reported.
A police source confirmed the story on Thursday morning, without saying how many people had been detained.
The raid followed a TV broadcast on Sunday of an investigation into young, French jihadists, which caused consternation among local residents who recognised their neighbourhood.
The government says that 1,136 French nationals have either gone to fight with armed Islamist groups in Syria and Iraq or wish to do so and has passed a new law to combat the trend.