The three men were arrested in the western Ternopil region last Thursday when they tried to sell a container of radioactive material for $10m, the SBU said in a statement.
The men – identified as a member of the Ternopil regional parliament and two businessmen – believed they were selling 3 672kg of radioactive plutonium-239, the statement said.
The material “could have been used for terrorist purposes for the creation of a dirty bomb”, the SBU said, referring to a kind of weapon combining radioactive material with conventional explosives.
Authorities were seeking to determine what substance was in the container, but the SBU said its radioactivity level was 250 times greater than normal background radiation.
The SBU said the substance had been produced on Russian territory in the Soviet era and could have been transferred to Ukraine from a neighbouring state, without providing further details.
The men have been charged with illegal handling of radioactive material and face from eight to 15 years in prison.