Kuwaiti coastguards arrested seven Iraqi sailors on a fishing boat on Sunday, saying they had trespassed into Kuwait's northern territorial waters, state-run news agency KUNA said.
The sailors had been taken to the Marine Security Department for investigation, KUNA quoted the coastguards' office as saying in a statement.
Diplomatic relations between the neighbouring Gulf states have remained fraught since Saddam Hussein's invasion of Kuwait in 1990-1.
Ties between the countries appeared to be improving earlier this month when Iraqi Prime Minister Nuri al-Maliki and his Kuwaiti counterpart agreed to resolve a standoff over war-era debts.
Iraq has been keen to resolve some of its disputes with Kuwait ahead of a March 27-29 Arab League summit in Baghdad, the first to be held there since before the 1990 invasion.