Sulayman Khalid, 20, from Regent's Park in western Sydney, appeared in Parramatta Local Court Wednesday, after having been arrested at his home the previous day, police said.
He was refused bail, and is scheduled to reappear in court on February 18, court staff said.
The maximum sentence he faces is 15 years, police said.
A second man, a 21-year-old from the Sydney suburb of Marsfield, was also charged by counter-terrorism police with breaching a control order.
A person can be subject to a control order if it substantially helps prevent a terrorist attack, or the person has trained with a listed terrorist organization or been convicted of terror offenses, according to the Australian Attorney General Department
The charge carries a maximum sentence of two years' imprisonment.
Australian Federal Police Deputy Commissioner Michael Phelan told reporters that the arrests related to "activity that has been going for a while now."
"This group has had ongoing conversations and activity for the last year," he said, adding that "particularly overt action" had been taken on 18 September and again last week, prompting the authorities to obtain search warrants.
A "significant amount of material" had been seized, he said.
While there was no specific threat of an imminent attack, he told reporters: "There was enough there that gave concern to us that something was being planned."
"The documents talked a little bit about potential government targets."
The arrests came the same day that Australian Prime Minister Tony Abbott warned of a "heightened level of terror chatter" following the Martin Place siege in Sydney, in which two people
, along with hostage-taker Man Haron Monis
, were killed.
"The terror threat remains high ... and at this level an attack is likely," Abbott told reporters Tuesday
"We don't know when and how an attack may come, but we do know that there are people with the intent and the capability to carry out further attacks."
The arrests were made as part of Operation Appleby, an ongoing investigation into Islamist extremists, which led to sweeping pre-dawn counter-terror raids in Sydney in September.
Eleven people have been arrested in relation to the operation so far, police said.
Phelan said Operation Appleby was focused on a group of 15 to 20 people in the Sydney region who sympathized with ISIS ideology, and who had been actively monitored for some time.
A police spokeswoman would not comment on claims in Australian media
that the target allegedly mentioned in the documents was an Australian Federal Police building, or that the documents described a plan to conduct guerrilla warfare in New South Wales' Blue Mountains.
Following his arrest, footage appeared in Australian media
of Khalid, dressed in a jacket bearing the ISIS flag, storming off the set of an Australian current affairs show in August in which guests had been discussing local support for Islamic extremism.