Nijjar, 45, was shot dead in June outside a Sikh temple in Surrey, a Vancouver suburb with a large Sikh population. A few months later, Canadian Prime Minister Justin Trudeau cited evidence of Indian government involvement, prompting a diplomatic crisis with New Delhi.
The Royal Canadian Mounted Police named the three men as Karanpreet Singh, 28, Kamalpreet Singh, 22 and Karan Brar, 22.
"We're investigating their ties, if any, to the Indian government," Mandeep Mooker, an RCMP superintendent, told a news conference.
The Indian mission in Ottawa did not respond to requests for comment.
Nijjar was a Canadian citizen campaigning for the creation of Khalistan, an independent Sikh homeland carved out of India. The presence of Sikh separatist groups in Canada has long frustrated New Delhi, which had labelled Nijjar a "terrorist".
Hardeep Singh Nijjar campaigned for the creation of Khalistan, an independent Sikh homeland. (AP PHOTO)
Last week the White House expressed concern about the reported role of the Indian intelligence service in assassination plots in Canada and the United States.
Canadian police said they had worked with US law enforcement agencies, without giving additional details, and suggested more detentions might be coming.
"This investigation does not end here. We are aware that others may have played a role in this homicide and we remain dedicated to finding and arresting each one of these individuals," assistant RCMP commissioner David Teboul said.
The trio, all Indian nationals, were arrested in the city of Edmonton in Alberta on Friday, police said. They are due to arrive in British Columbia by Monday.
Trudeau announced in September that Canadian authorities were pursuing allegations linking Indian government agents to the murder. New Delhi rejected Trudeau's claim as absurd.
"We welcome the arrests but this does lead to a lot more questions," said Balpreet Singh, legal counsel and spokesperson for the Canada-based World Sikh Organisation advocacy group.
"Those who have been arrested are part of a hit squad but it's clear that they were directed," he said.
Canada had been pressing India to co-operate in its investigation. Last November, US authorities said an Indian government official had directed the plot in the attempted murder on US soil of Gurpatwant Singh Pannun, a Sikh separatist and dual citizen of the US and Canada.
"While today's action ... is a step forward, it only scratches the surface," Pannun said in a statement, calling for action to "dismantle the networks that enable and perpetuate such crimes against Canadians on Canadian soil".
Nijjar's friend Moninder Singh said the arrests are "bittersweet.
"It's a relief that the investigation is moving forward. At the same time, it's still raising a lot of questions," he said.
He and other Sikh Canadian leaders told Reuters that Canada has taken Indian interference more seriously since Nijjar's death.
Nijjar's death represented "the undermining of (Canada's) sovereignty at a very, very different level," Singh said.
