Of the two, a 19-year-old male was charged with attempted terrorist act, intentionally causing injury, acting in preparation of terrorist act, as well as being a member of IS, which is prohibited in Australia, Xinhua news agency reported.
While the second person, a 20-year-old man was charged with one count of attempted terrorist act.
Meanwhile, a 16-year-old was also arrested in Melbourne on Wednesday but was subsequently released.
Australian Federal Police representatives said they became concerned about the level of the men's radicalisation to extremist ideologies, which they say occurred largely online.
"There is a range of factors but one that cannot be underestimated is the magnification of the online environment and what that means for the radicalisation of these individuals," Assistant Commissioner of Counter Terrorism and Special Investigations Scott Lee said.
Officers emphasised it was the crime, not the ideology that they were targeting.
"But let me make it very clear that we target the crime, not the ideology. It makes no difference to us," Assistant Commissioner Michael Hermans from Victoria Police Counter Terrorism Command said.
According to Lee, counter-terrorism operations regularly involved young people who had spent large amounts of time online -- a scenario which has increased during the global pandemic.
"That is certainly what we have seen in the Covid period, as people come out into the physical world after being isolated and driven into the online environment to a degree.
"That has exacerbated some of the radicalisation we have seen," Lee said.
Penalties for terror-related offences in Australia are particularly severe, with the 19-year-old potentially facing life imprisonment.