Andrzej Rokita, the local police chief in Krakow - where the men were being questioned - said the theft had been financially motivated, and it remained unclear whether it was carried out to order.
"From the information we have, none of the five belong to a neo-Nazi group nor hold such ideas," Andrzej Rokita said of the suspects.
The sign's theft had caused outrage in Israel and among Polish politicians.
The sign has been cut into three pieces, police say
More than a million people - 90% of them Jews - were murdered by the Nazis at Auschwitz during World War II.
Pawel Sawicki, a spokesman for Auschwitz museum, said the recovery of the sign was an "enormous relief".
"We are extremely grateful to the police who have done fantastic work," he told AFP news agency.
"This symbol, probably one of the most important of the past century, can be put back in its place."
The museum is preparing to celebrate the 65th anniversary of Auschwitz-Birkenau's liberation by Soviet troops on 27 January.
Scrap metal yards searched
Police had stepped up security checks at airports and border crossings and searched scrap metal yards over the weekend in their hunt for the 5m (16ft) sign, which translates as "Work sets you free".
The sign has been restored since the camp was liberated in 1945
"We have arrested five men aged from 20 to 39 in the north of Poland," said Krakow police spokesman Dariusz Nowak.
"They were picked up shortly before midnight and the sign was found in a house," he added without giving further details.
The wrought-iron sign was half-unscrewed, half-torn off from above the death camp's gate between 0330 and 0500 on Friday.
Investigators said at least two people would have been needed to steal the 40kg (90lb) sign.
Auschwitz museum spokesman Jaroslaw Mensfelt said the thieves had apparently carried the sign 300m (328 yards) to an opening in a concrete wall. The opening was left intentionally to preserve a poplar tree dating back to the time of World War II.
Four metal bars that blocked the opening had been cut and footprints in the snow led from the wall opening to the nearby road, where police presume the sign was loaded on to a vehicle.
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