The police in Gisborne say they found a van with 22 sheep crammed in "like sardines" early this morning.
The sheep were found after officers noticed the erratic way the van was being driven.
It was eventually tracked to a Rimu St property where it was found parked in the backyard and the two teenagers were arrested.
Senior Sergeant Maui Aben of the Gisborne police said the sheep were now in the care of the Gisborne District Council's animal control unit.
He said it was not known where they came from and the police were trying to trace their ownership through their eartags.
Meanwhile, he said anyone who was missing sheep should contact them.
The teenagers, aged 16 and 17, were due to appear in the Youth Court today.