Federal agents arrested Everitt Aaron Jameson, a 26-year-old Islam convert, in San Francisco, California.
It is claimed Mr Jameson said “Christmas was the perfect day” for a terror attack in San Francisco and “did not need an escape plan because he was ready to die”.
Officials said the suspect was talking to an undercover FBI agent and added that the tow truck driver was arrested earlier this week.
His home in Modesto was searched and several firearms were found along with fireworks.
According to a handwritten letter obtained by authorities, Mr Jameson called himself Abdallah adu Everitt ibn Gordon and was said to be inspired by the New York terror attack on October 31 when a man drove a car into a crowd and killed eight people.

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FBI documents also allege he posted and liked pro-ISIS and pro-terrorism content on Facebook.
It is reported that the suspect picked a location called Pier 39 because he “knew it was heavily crowded area” and that it would be easy to “funnel” people into an area where he would presumably shoot them.
Mr Jameson was discharged from the Marine Corps and has had prior military experience as a “sharpshooter” and has expertise in rifle marksmanship.
Authorities allegedly found a manifesto in his home in which he denounced Trump for declaring Jerusalem as the capital of Israel.