Since Sept. 11, 2001, authorities have feared New York's tunnels or bridges could be targets for terrorists.
The Holland Tunnel -- linking lower Manhattan and New Jersey -- is one of four major tunnels into the city. More than 34 million cars and trucks pass through it every year -- clearly a tempting target for terrorists.
The plotters, described as jihadists, wanted to atack the tunnel with high explosives, according to a report in the New York Daily News, quoting FBI sources.
A suspect has been arrested in Lebanon, officials told ABC News.
A Justice Department official confirmed to ABC News the basics of the alleged plot, but said the planning was in its initial phases and mostly overseas. Officials do not believe there are links to plotters or operatives inside the United States.
The Holland Tunnel plot apparently aimed to cause an explosion powerful enough to blast a hole in the tunnel. The plotters reportedly hoped to trigger a devastating flood in lower Manhattan, the city's financial center.
The idea to bomb the tunnel reportedly was inspired by the flooding in New Orleans caused by Hurricane Katrina.
Officials told the Daily News the alleged plot was more serious than the rag-tag plan by seven suspects in Miami to blow up the Sears Tower in Chicago and a federal building in Florida.
"This is more advanced than the Miami Seven," said one official quoted in the Daily News.
But an Army Corps of Engineers official told the newspaper the concept was badly flawed. The Holland Tunnel is not in the Hudson River, but in the bedrock beneath it. And the lowest part of downtown Manhattan is 10 feet above sea level.
The Daily News report says the plotters had appealed to Abu Musab al-Zarqawi, the Jordanian terrorist leader in Iraq killed last month.
The paper says Zarqawi promised money and assistance to the plotters, though it is unclear if they ever got it.