Officers late Sunday raided a building in the capital Jakarta that houses a sauna and a gym, and halted what they said was a sex party promoted as "The Wild One".
Pictures circulating online showed topless men sitting crammed in a room next to gym equipment after the police raid.
"Our officers did an undercover investigation and raided the place on Sunday," senior detective Nasriadi, who like many Indonesians goes by one name, told AFP.
People attending the event had to pay an entry fee, which included admission to a striptease show on one floor of the building, he said. The main "sex party" took place on another floor which was dimly lit, Nasriadi added.
Some of the detainees were Monday paraded in front of the media at a press conference wearing black masks, while a coalition of legal aid groups condemned the arrests and the mens' treatment.
Homosexuality and gay sex are legal everywhere in Indonesia except in conservative Aceh province, but Nasriadi said that 10 of those arrested in the Jakarta raid could be charged under the country's tough anti-pornography laws.
Those include the alleged organisers of the event as well as men suspected of being prostitutes and striptease dancers. Those found guilty of breaking the laws face up to 10 years in jail.
The other detained men are still being questioned by police as potential witnesses in the case, the detective said.
Growing hostility
The raid is the latest sign of growing hostility towards Indonesia's small lesbian, gay, bisexual and transgender (LGBT) community. Since last year, ministers, hardliners and influential Islamic groups have been lining up to publicly denounce homosexuality.
A coalition of legal aid groups, which is representing the men, condemned the raid and accused police of refusing to let those arrested get dressed before transferring them to a police station and during subsequent questioning.
They also accused the police of taking naked pictures of the men and spreading them on social media.
"These arrests are a bad precedent for other gender and sexual minorities," said a statement from the group. Police did not immediately respond to requests to comment on the claims.
The backlash against the homosexual community began in early 2016, and activists believe it was triggered by widespread media coverage of a decision in the United States to legalise same-sex marriage.
Recent examples include a raid earlier this month on a suspected gay sex party in the city of Surabaya. Eight men were named suspects following the raid and face being charged with the anti-porn laws.
And last week an Islamic court in Aceh sentenced two men to be publicly caned for having gay sex, the first time such a punishment has been handed down for homosexual activities in the conservative province.
