The men, associated with a splinter group of the Mahdi Army believed to be backed by Iran, were detained Saturday in the capital’s Sadr City neighbourhood, the military said.
No shots were fired by U.S. forces during the raid, officials said.
Four British security guards and a computer expert, also a Briton, were abducted from the Iraqi Finance Ministry on May 29 by some 40 heavily armed men wearing police uniforms.
British officials have not released the names of the kidnapped men and requested their identities not be disclosed by the media.
However, families of the abducted men and the British ambassador to Iraq have publicly pleaded for their release.
Four of the Britons were employed by Montreal-based security company GardaWorld and the fifth worked for McLean, Va.,-based BearingPoint.
Gen. David Petraeus, the top U.S. commander in Iraq, said in June there had been several failed operations to rescue the hostages.
Iraqi officials have said the Mahdi Army may have grabbed the men in retaliation for an earlier killing by British forces of the militia’s commander in the southern city of Basra.
As recently as last month, the U.S. military said it believed the men were still alive.
The U.S. has accused Iran of arming and financing Shiite militias fighting American and Iraqi troops in Iraq – allegations Iran denies.
