During the search which ended around 10:30pm on Thursday, three people including a News Editor of the newspaper were arrested.
Police also sealed the newspaper's printing press and seized several computers and many printing equipment, said its special correspondent Sakhawat Hossain Badsha.
DMP Deputy Commissioner (DC) Md Masudur Rahman said the raid followed a case filed with Wari Police Station earlier in the day.
The charges are related to the newspaper’s report of Thursday claiming that Indian troops had assisted the operations of joint forces in Bangladesh's Satkhira.
The report had also said that following permission from the Prime Minister's Office, the Ministry of Foreign Affairs had written to Indian government for this.
The government in a handout later in the day dismissed the claim as ‘completely false and fabricated’.
Police lodged the case under the Information and Communications Technology Act accusing Editor AMM Bahauddin, the Publisher, the Chief News Editor and a Correspondent of the newspaper, which was founded by late Maulana Abdul Mannan, who was known as a 1971 war criminal.
DMP spokesperson Rahman told bdnews24.com the raid was conducted based on the case filed for publishing ‘false and fabricated’ news.
"This report is false, fabricated, motivated and is aimed to create misgiving," he said.
He said such false report tainted Bangladesh's image in both domestic and international arenas. "This has also tarnished the image of the country's law-enforcing agencies."
However, during the raid, police detained News Editor Robiullah Robi, acting Chief Correspondent Rafiq Mohammad, Diplomatic Correspondent Ahmed Atik and Senior Correspondent Afzal Bari.
Later, Bari was released, but the other three was arrested and taken to the headquarters of the Detective Branch of police, said a report on police's online news portal 'DMP News'.
Badsha told bdnews24.com that police sealed their press and the photo department.
"Our newspaper won't come out (Friday). We will discuss the situation tomorrow morning and decide our next step."
Meanwhile, the BNP’s acting Secretary General Mirza Fakhrul Islam Alamgir has condemned the police action and arrests.
In a statement on Thursday night, he termed this incident 'torture on newspapers'.
"Daily Inqilab's press has been sealed and professional journalists have been arrested to cover up the wrongdoings [of the government] and for publishing true news."
He also demanded immediate release of the journalists and reopening of the newspaper's press.