Three men have been arrested on suspicion of terror charges, two at Manchester Airport, Lancashire police said.
The third man was arrested in the Accrington area and police were last night searching the men's homes in Blackburn.
All three men are reported to be in their 20s.
Locals said the searches had been carried out in the Whalley Road area of the town.
Resident Omar Hussain, who lives in Whalley Road, said: "I came in about 10.15pm and there were police officers outside and they handed me a leaflet saying 'don't be worried, they're just looking into the neighbourhood, there have been three terror arrests'.
"It was quite hard to see which houses because there were crowds of people outside, and two police cars and a van.
"It's really worrying that it's so close. It's like 'oh my God, who is it?' You can't believe it's actually happening on your street, in your community."
Accrington councillor Doreen Pollitt was surprised to learn one of the men was arrested in the area.
She said: "The majority of our community here are Kashmiri.
"We have never had any problems, and have a very good relationship with the Kashmiri Community, and have done for a very long time.
"I can't make any further comment until I know more about the incident."
Bill Crawshaw, terminal duty manager at Manchester airport, said: "This has had no effect on the airport. It is a total police operation and we didn't even know that it had happened until afterwards."
Tonight's arrests followed a joint operation by Lancashire police and Greater Manchester Police Counter Terrorism Unit.
Chief Supt Andy Rhodes, divisional commander for eastern division at Lancashire Police, said: "Lancashire constabulary will investigate any information that is passed to us and ensure it is accurate before responding in a proportionate and measured way.
"These arrests and subsequent searches of the nearby premises will be conducted with sensitivity and carried out as quickly as possible to ensure minimum impact on the three areas concerned.
"However these types of inquiries can be complex and may take time to resolve.
"I would ask local residents to be patient with us and to be assured that we will keep them updated in relation to the investigation, as and when we can."
It's not the first time Blackburn has been linked to alleged terror plots.
Junade Feroze, 31, of Malham Gardens, Blackburn, was imprisoned for 22 years in 2007 for helping al Qaida operative Dhiren Barot pave the way for bomb plots in the UK and America.
And Sajid Badat, 24, who conspired with shoe bomber Richard Reid, had studied at the College of Islamic Knowledge and Guidance in Blackburn.