The Garda and the RUC are working to uncover information about a cross-Border criminal gang responsible for importing the 25 guns and 750 kg of cannabis found near the Border.
It is believed the guns and cannabis (worth about £7.5 million) found on Monday night in a cold storage shed in Castleblayney, Co Monaghan, were imported by a mainly Northern group using Border hauliers to import the items from Holland.
It is suspected that some members are former paramilitaries but Garda sources described the gang as "criminal rather than paramilitary".
The extent of the guns find, however, has caused concern on both sides of the Border about the gang's intentions.
The haul included 15 miniature machine pistols manufactured in Eastern Europe, 10 American-manufactured Smith and Wesson pistols, along with silencers.
This was one of the largest batches of weapons ever smuggled into the State by criminals and was causing concern yesterday among senior police on either side of the Border.
One Garda source said there was a suspicion that the criminals might have intended to sell the weapons on to associates in Britain.
It was also thought possible that the gang might be arming itself for confrontations with paramilitary organisations or other drugs gangs.
The seizure, made by detectives from the Cavan-Monaghan division on Monday evening, underlines growing concerns in both police forces that criminal and ex-paramilitary involvement in the drugs trade is developing rapidly.
There are fears that it may replace terrorism and become the next biggest security threat on the island.
There have been at least eight drug-related murders North and South in the past year. A member of one cross-Border drugs smuggling gang, Thomas Lockhard (34) from Belfast, was abducted, tortured and shot dead in April by gang members who suspected he was a Garda informant.
Another major drugs smuggler, Patrick Farrell from Newry, Co Down, last year attempted to smuggle 20 handguns through Dublin port along with a large amount of cannabis. But this was seized by gardai and Farrell was shot dead by his girlfriend last autumn.
According to RUC sources, large quantities of drugs have been reaching Northern Ireland from Holland via the Republic and although the gangs are mainly made up of non-political criminals it is suspected they are being helped by ex-paramilitary figures from republican and loyalist camps.
The latest find follows a succession of major drugs hauls by the Garda National Drugs Unit with current estimates of the value of drugs seized during the year between £70 million and £100 mil lion.
On Monday night, gardai seized a lorry at a cold storage depot in Castleblayney and found the guns and drugs hidden among pallets of frozen bread rolls which were shipped from Amsterdam.
Two men, one from Castleblayney and one from Co Armagh, were arrested and are being held for questioning in Castleblayney Garda station under the Drugs Trafficking Act, which allows their detention for seven days without charge.
Chief Supt Colm Rooney, head of the Cavan-Monaghan Garda division, said it was a huge find and the nature of the cargo indicated the ruthlessness of drug-traffickers.
Each of the guns was carefully wrapped in a package which also contained a silencer and ammunition.
Chief Supt Rooney said: "We are absolutely delighted to have uncovered this new trail. It's an ongoing battle against the drug-traffickers."