Those held in a series of raids in the capital Kuala Lumpur were mainly from Bangladesh, India and Pakistan, officials said.
Machines to make fake passports and to forge Malaysian immigration documents were among the items seized.
Security in the city is being tightened up ahead of the Southeast Asian Games which begin in just over a week's time.
Monday's raids saw police break down doors and lead scores of people away in handcuffs to waiting buses. They were taken to police stations for investigation and screening.
Authorities said they were targeting anyone with missing or fraudulent travel documents or who was believed to be affiliated with terror groups in Syria and Iraq.
"We will detect and take action against foreigners suspected of having links with terrorists, especially those involved in activities in Syria," police counter-terror official Ayob Khan Mydin Pitchay, said, quoted by Free Malaysia Today.
Officers were also equipped with devices to detect radioactive materials, police said, although no such items were found.