The site’s founders have been charged with violating piracy laws.
Federal prosecutors have accused it of costing copyright holders more than $500m (£320m) in lost revenue. The firm says it was diligent in responding to complaints about pirated material.
In response, the hackers group Anonymous has targeted the FBI and US Department of Justice websites.
The news came a day after anti-piracy law protests, but investigators said they were ordered two weeks ago.
The US Justice Department said that Megaupload’s two co-founders Kim Dotcom, formerly known as Kim Schmitz, and Mathias Ortmann were arrested in Auckland, New Zealand along with two other employees of the business at the request of US officials. It added that three other defendants were still at large.
“This action is among the largest criminal copyright cases ever brought by the United States and directly targets the misuse of a public content storage and distribution site to commit and facilitate intellectual property crime,” said a statement posted on its website.
The FBI website was intermittently unavailable on Thursday evening due to what officials said was being “treated as a malicious act”.
The hackers’ group Anonymous said it was carrying out the attacks.
The Motion Picture Association of America’s website also suffered disruption.
