The MoD said six Irish Guards troops and a Coldstream Guardsman veteran were arrested by the Royal Military Police as part of a "planned operation".
The 1stBattalion Irish Guards are set to lead Thursday's Trooping the Colour for the Queen's Platinum Jubilee.
The MoD said none of the soldiers under investigation would take part.
Founded in 1900 by Queen Victoria, the Irish Guards have been deployed as part of conflicts in Iraq and Afghanistan.
The regiment - which counts the Duke of Cambridge as its royal colonel - also guards royal palaces, where they can be seen wearing the distinctive red tunic and bearskin hat.
Last week, Prince William presented the Irish Guards with new colours - a flag that acts as a rallying point for troops - ready for them to lead the parade on the Queen's birthday as the Platinum Jubilee weekend begins.
In a statement, the MoD said: "As part of a planned operation, the Royal Military Police arrested six Irish Guards soldiers and a Coldstream Guardsman veteran from across the UK on suspicion of conspiracy to supply drugs and moneylending and laundering offences.
"None of the soldiers under investigation will participate in planned Queen's Platinum Jubilee parades.
"The Army does not tolerate any type of illegal or fraudulent behaviour. As this is now the subject of an independent Royal Military Police investigation, it is inappropriate to comment further."
Thank you BBC news for the article
Contribute to your future, a Non Profit Organization and buy us a Coffee with 3 simple clicks and a minute of your time. Imagine what we can do together.
To thank you, we will call you personally.
This is the amount that will be distributed amongst the current shareholders.
Current Share Holders
89/500,000