A man of 58 and six young adults aged 18 to 25 were living at a farm in the province of Drenthe.
The family were found after the eldest of the children ordered beer at a bar in the nearby village of Ruinerwold.
He then told staff he needed help, broadcaster RTV Drenthe reported.
“We found six people living in a small space in the house which could be locked but wasn’t a basement,” police said in a statement late on Tuesday.
The older man has been arrested. According to the family, he is the father of the six children, say police. It was not clear whether they had been there voluntarily, police added. The eldest son was not there at the time, police told the BBC.
Local reports described the man as a handyman called Josef B, who was originally from Austria.
“I’ve never seen anything like it,” local mayor Roger de Groot told reporters. He revealed that some of the family had not been registered locally and also indicated that the 58-year-old was not the father.
The public broadcaster said that the family had been living in isolation waiting for the end of time.
Bar owner Chris Westerbeek described how a man had come in, ordered five beers and drunk them.
“Then I had a chat with him and he revealed he had run away and needed help… then we called the police,” he said.
He added: “He had long hair, a dirty beard, wore old clothes and looked confused. He said he’d never been to school and hadn’t been to the barber for nine years.”
“He said he had brothers and sisters who lived at the farm. He said he was the oldest and wanted to end the way they were living.”
Officers visited the remote farmhouse and carried out a search. They discovered a hidden staircase behind a cupboard in the living room that led down to a secret room where the family were housed.
Ruinerwold is a village with a population of less than 3,000. The farm is outside the village and is accessible by a bridge over a canal.
The farm, which is part-hidden behind a row of trees, also has a large vegetable plot and a goat.
A neighbour told Dutch media that he had only ever seen one man on the farm, no children, and that there had been animals on the grounds, such as geese and a dog.
The local postman said he had never delivered a letter there. “It’s actually pretty strange, now I come to think about it,” he told Algemeen Dagblad news website.
People in the area tweeted the news and one reporter posted images of the farmhouse, saying he had been asked to keep at a distance.
Police in Drenthe confirmed that a 58-year-old man had been arrested and was under investigation after refusing to co-operate.
“Yesterday someone reported to us [that they were] worried about the living conditions of people in a house in Buitenhuizerweg in #Ruinerwold,” they wrote in a tweet. “We went there.”
“We still have many unanswered questions,” they said, adding that all scenarios were open and their investigation was fully under way.
The farmhouse and the surrounding grounds were cordoned off.
Some reports suggested the 58-year-old had suffered a stroke and had been confined to his bed.
It was unclear what had happened to the children’s mother, although the mayor said she had died some time ago.