The passage was 9 feet deep and about 2,600 feet long - about three-quarters of that distance in Tijuana and the rest in San Diego. It was lit, ventilated and built with metal beams to prevent collapse.
It was unclear whether any drugs got through the tunnel or if it had an exit yet in the U.S.
Lauren Mack, a spokeswoman for U.S. Immigration and Customs Enforcement, declined to comment.
It was also unclear which drug trafficking organization began the engineering feat.
The region is largely controlled by Mexico's Sinaloa cartel, whose leader Joaquin "El Chapo" Guzmanescaped from a maximum-security prison in Mexico in July .
Guzman is known to be highly skilled in tunnel building. He escaped from prison through an elaborate, ventilated tunnel over a mile long with a motorcycle mounted on rails.
Mexican police said in a press release about the drug tunnel that 16 people were detained on suspicion of drug trafficking and had told authorities that they had ties to a criminal group that operates in the state of Jalisco - an apparent reference to the Jalisco New Generation cartel, which controls that part of western Mexico.
The people were caught off-guard when Mexican authorities arrived at a Tijuana warehouse with a search warrant, police said. No shots were fired.
The drugs were wrapped in 873 packages covered with plastic and tape, police said.
Dozens of tunnels have been found along the U.S.-Mexico border in recent years - the most sophisticated equipped with hydraulic lifts and electric rail cars.
The San Diego-Tijuana region is popular because its clay-like soil is easy to dig with shovels and pneumatic tools, and both sides of the border have warehouses that provide cover for trucks and heavy equipment.