Police in Fiji have raided warehouses outside the capital Suva and seized drugs and chemicals with a street value said to be more than $500m.
Mr Hughes said the drugs were headed for worldwide markets
The Fijian police commissioner, Andrew Hughes, said it was the biggest laboratory producing methamphetamines ever found in the southern hemisphere.
Seven people were arrested in the raid
on the three warehouses.
Fiji has increasingly become a staging ground for international gangs making and trafficking drugs, Mr Hughes said.
"Increasingly we are seeing these elements coming to Fiji and joining up
with local organised criminal groups," he added.
Mr Hughes said he believed the factory was making crystal methamphetamine,
an amphetamine-based stimulant also known as ice, and that it was due to be sold in Australia, New Zealand, the United States and Europe.
Police from Fiji, Australia and New Zealand were involved in the operation. They had been monitoring the illegal factory for more than a year, but waited until now to move because the production of drugs had just begun.
Those arrested, four Asians of unspecified nationality and three Fijians, are being questioned and may appear in court on Thursday, AP news agency reports.
Dozens of officers involved in Tuesday's raids wore special protective overalls as they searched the buildings where they found drugs "bubbling away" in a complex which, Mr Hughes said, was stacked with drums of chemicals and equipment.
The police commissioner said the laboratory had the capacity to produce 500
kilograms (1,102 pounds) of the methamphetamine per week.
Fijian police estimated the combined value of the drugs found and those which could have been produced from the raw materials recovered at about $540m.
The South Pacific state is currently debating tougher laws for drug traffickers and it set up a police transnational crime unit 14 months ago, which was involved in this week's operation.