Uniformed and plain-clothed security officials conducted surprise raids on the offices of 17 non-governmental organisations (NGOs) in Cairo.
Among the offices raided were Freedom House, the Budgetary and Human Rights Observatory, the Arab Centre for Independence of Justice and Legal Professions, and Konrad Adenauer, whose staff were effectively held hostage.
The raids also targeted the US government-funded National Democratic Institute and the International Republican Institute, whose chairman is Republican Senator John McCain.
The US State Department said it was "deeply concerned" about the raids, the Guardian reported.
Relations between Egypt's ruling Supreme Council of the Armed Forces (SCAF) and the United States appear to be at a new low in the wake of the raids.
"We call on the Egyptian government to resolve this issue immediately and to end harassment of NGO staff as well as return all property," a State Department official said.
In recent months, SCAF has accused local NGOs of receiving money from abroad and has argued that the recent unrest in the country is the product of "foreign hands".
The Egyptian news agency Mena said the 17 "civil society organisations" had been targeted as part of an investigation into the foreign funding of such groups.
"The public prosecutor has searched 17 civil society organisations, local and foreign, as part of the foreign funding case," Mena cited the prosecutor's office as saying. "The search is based on evidence showing violation of Egyptian laws, including not having permits."
A group of civic organisations has issued a joint statement condemning the raids as "attacks" on them.
"The Egyptian Organisation for Human Rights and the undersigned civil society organisations denounce the ferocious attack against many human rights and development NGOs in order to deter these bodies from implementing their cultural and human rights' defence efforts.
"The undersigned civil society organisations express sorrow for the violent attack against the civil society organisations that aim mainly to spread the culture of human rights, the rule of law and democracy, in addition to defending all Egyptian citizens against any human rights violations. Such an attack is against international standards of human rights," the statement said.