The Interior Ministry said it launched raids in Jeddah as well as two areas in Makkah itself, including the Ajyad Al-Masafi neighbourhood, located near the Grand Mosque.
There, police said they engaged in a shootout at a three-story house with a suicide bomber, who blew himself up and led to the building's collapse.
He was killed while the blast wounded six foreigners and five members of security forces, according to the Interior Ministry's statement. Five others were arrested, it said.
Saudi state television aired footage after the raid near the Grand Mosque, showing police and rescue personnel running through the neighbourhood's narrow streets.
The blast demolished the building, its walls crushing a parked car as what appeared to be shrapnel and bullet holes peppered nearby structures.
The Interior Ministry “confirms that this terrorist network, whose terrorist plan was thwarted, violated, in what they would have perpetrated, all sanctities by targeting the security of the Grand Mosque, the holiest place on Earth.”
“They obeyed their evil and corrupt self-serving schemes managed from abroad whose aim is to destabilise the security and stability of this blessed country,” the statement said.
Iran offers support, Qatar expresses solidarity
Despite their severed ties, both Iran and Qatar on Saturday voiced support for Saudi Arabia.
“Iran ... as always expresses its readiness to assist and cooperate with other countries to confront these criminals, who deal death and ignorantly spread hate,” Iran's Foreign Ministry Spokesman Bahram Ghassemi said.
The Qatari foreign ministry expressed “solidarity with the brotherly kingdom of Saudi Arabia”.
Six foreign pilgrims were wounded when a suicide bomber blew himself up near the Grand Mosque in Mecca, where hundreds of thousands of worshippers had gathered for prayers on the last Friday of Ramazan.
The Saudi interior ministry said a wider plot had been foiled with the arrest of five suspects earlier in the day.
Since late 2014, the kingdom has faced periodic bombings and shootings claimed by the militant Islamic State group.
Iran and Saudi Arabia are locked in a bitter battle for regional influence and have had no diplomatic relations since January last year.
Saudi Arabia and its allies severed all ties with Qatar earlier this month, accusing it of supporting “terrorist groups” in the region, a charge Doha denies.
Unknown attackers
Saudi officials did not name the group involved in the attack.
The ultraconservative kingdom battled an Al Qaeda insurgency for years and more recently has faced attacks from a local branch of the Islamic State group.
The disrupted attack comes at a sensitive time in Saudi Arabia as King Salman earlier this week short-circuited the kingdom's succession by making his son, Defence Minister Mohammed bin Salman, first in line to the throne.
The newly appointed crown prince, 31 years old, is the architect of Saudi Arabia's war in Yemen against Houthi rebels, now stalemated. He has also offered aggressive comments about the kingdom confronting Iran.
Meanwhile, Saudi Arabia and other Arab countries have cut diplomatic ties to neighbouring Qatar and are trying to isolate the energy-rich country over its alleged support of militants and ties to Iran. Qatar long has denied those allegations.
The Grand Mosque has been the target of militants before. In 1979, a group of militants seized the mosque, home to the Kaabah, for two weeks as they demanded the royal family abdicate the throne.
The official toll of the assault and subsequent fighting to retake the mosque from hundreds of armed militants was over 100 people killed and 500 wounded.
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