In a televised statement, the generals announced that they are canceling the process surrounding Sunday's election and that they will govern the country until further notice.
They also state that they have closed the country's borders.
Parliamentary and presidential elections were held in the small West African nation on Sunday. Afterwards, both incumbent President Umaro Sissoco Embaló and challenger Fernando Dias declared victory, contributing to growing unrest in the country.
The official preliminary results were expected to come on Thursday.
Rumors of a coup d'état began circulating on Wednesday afternoon when gunfire was heard around the presidential palace in the capital Bissau. Shortly afterwards, Embaló was also reportedly taken into custody.
A military source confirmed to AFP that he is being held captive at the General Staff headquarters.
Opposition leader Domingos Simões Pereira, who was stopped from participating in Sunday's election after a Supreme Court decision and instead supported Fernando Dias' candidacy, has also been arrested, according to sources to the news agency.
In their televised statement, the generals claim that they have discovered plans to destabilize the country with the help of drug lords and through the importation of weapons.
Guinea-Bissau is one of the world's poorest countries and has been exploited as a transit country for drug trafficking between Latin America and Europe. Crime has been facilitated by the country's long history of political instability.
