The US government has criticised Azerbaijan for acting against a Western-funded pro-democracy project called the Free Thought University.
US Ambassador Richard Morningstar met the pro-democracy activists and said he was "troubled by the government's reaction to protests this year".
The chief prosecutor linked the project to a youth movement called N!DA, seven of whose members have been arrested.
The US ambassador condemned the arrest and interrogation of young activists.
"I was particularly disappointed to hear that authorities closed Free Thought University's office just last night," he said, adding that as "a friend of Azerbaijan" he wanted to see "government engagement with citizens, especially its young citizens, to address their legitimate concerns".
The chief prosecutor's office denied that the university had been closed, but said its officers had seized documents from the project.
The university's founders insist that it has "no affiliation with any other organisation".
Seven N!DA activists are being held on charges of possession of drugs and firearms, which can incur a penalty of five to eight years' imprisonment.
Local television broadcast confessional videos of the accused, who said they had wanted to "cause trouble" and throw petrol bombs at the police.
There have been several unusually big street protests in Azerbaijan this year - an election year for President Ilham Aliyev. Human rights groups have accused his government of stifling dissent and harassing journalists.
Crowds in the capital Baku twice protested against a rise in non-combat deaths in the army. They were dispersed by police using baton charges and water cannon.
Senior members of the ruling party have sharply criticised youth activists who organise on social networking sites, calling them "radical" and "wayward".