Tow truck driver Everitt Aaron Jameson, 26, was planning to target the city's busy Pier 39 tourist spot, according to an affidavit submitted by FBI Special Agent Christopher McKinney.
The suspect is said to have outlined to undercover agents how he wanted to use explosives to target crowds at the pier between December 18 and 25 because "Christmas was the perfect day to commit the attack."
Jameson professed not to need an escape plan as he was "ready to die," according to the document.
The suspect's home in Modesto, California, was raided by FBI agents on Wednesday, where they allegedly found his last will and testament along with weapons and ammunition.
Jameson attended basic training with the Marine Corps in 2009 and graduated with a "sharpshooter" rifle qualification, according to the FBI, but was discharged after failing to disclose a history of asthma.
According to McKinney, Jameson selected Pier 39 -- which gets around 10 million visitors a year -- because "he had been there before and knew it was a heavily crowded area."
'Radical jihadi beliefs'
"Jameson explained that he also desired to use explosives and described a plan in which explosives could 'tunnel' or 'funnel' people into a location where Jameson could inflict casualties," McKinney stated.
The suspect inadvertently revealed his plans to an undercover FBI agent he believed to be a senior leader of the ISIS, according to the court document.
Jameson said the US needed "another attack like New York or San Bernardino," adding that he wanted to use vehicles and firearms to carry out an attack.
"Today, our incredible law enforcement officers have once again helped thwart an alleged plot to kill Americans," Attorney General Jeff Sessions said in a statement.
"The threat from terrorism is real -- and it is serious -- but the American people can be assured that the Department of Justice remains vigilant in protecting our homeland," he added.
According to the criminal complaint, Jameson "has espoused radical jihadi beliefs, including authoring social media posts that are supportive of terrorism."
He "loved" a post on November 29 of a propaganda image of Santa Claus standing in New York with a box of dynamite.
He was charged in the Eastern District Court of California with attempting to provide material support to a designated foreign terrorist organization and faces up to 20 years in prison if convicted.
"He was under surveillance by law enforcement, and the public was never in imminent danger," the FBI said in a statement.
Local newspaper the Merced Sun Star published a video interview with a man it identified as the suspect's father, Gordon Jameson, who described his son as a "the gentle, kind type of Muslim person" and said the FBI had got its facts wrong.
"I don't know too much about the case because the FBI isn't saying much to me but I know my son wouldn't harm nobody. He wouldn't do that to innocent people," he said.
"I love him to death and I can't wait to see him again and hold him in my arms."
The Sacramento Bee quoted the grandfather of Jameson's ex-wife Ashley Monett Jameson, who told the paper the couple have two young children.
Ashley Jameson is in prison, according to the paper, which added that the children were in foster care, citing a restraining order that it said had been filed by the suspect.
Hours after his arrest it emerged that Jameson had written to his local newspaper, the Modesto Bee, when he was 16, offering his backing for US troops remaining in Iraq following the conflict that began in 2003.
"I don't know what you were taught, but I was raised to finish something you start, and guess what? It's not finished yet," he wrote.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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