The smash and grab theft took place at Craven Jewellers, in High Street, Yeadon, yesterday just after 3pm.
One of the suspects smashed the window the sledgehammer, reached in and grabbed the jewellery, before leaving in a waiting red Vauxhall Corsa.
CCTV operators in Bradford city centre spotted the vehicle later that afternoon and followed it to a retail park, where the suspects left it.
West Yorkshire Police officers arrested the men a short time later and a sledgehammer and axe were recovered from the car. The two men remain in custody.