Officers raided a property in the central west of NSW following an investigation with detectives from the NSW Police Force's State Crime Command, the Australian Federal Police (AFP) and the Australian Criminal Intelligence Commission (ACIC).
Police said they received information last year that an illegal tobacco crop was being grown on a property at Murga, about 55km east of Parkes.
Under Operation Phobetor, detectives worked in consultation with investigators from the Australian Taxation Office (ATO) and the Australian Border Force (ABF)-led Illicit Tobacco Taskforce.
Authorities executed a warrant at the property about 10am on April 5 and located, seized and destroyed about 16 tonnes of the illicit drug.
Police said the seizure is estimated to have a potential excise of more than $28 million.
No arrests were made and inquiries are continuing.
Detective Superintendent Stuart Cadden, the commander of the joint agency team, said the seizure has disrupted the syndicate's supply chain, and any profits set to be made won't be funnelled into organised crime.
"The tobacco is simply one source of income that organised criminals use to fund their other illicit activities," he said.
ATO assistant commissioner Justin Clarke said illicit tobacco growing operations evade excise duty and cost the community millions of dollars that could be spent on essential services.
"These operations are not run by genuine farmers or landowners, but by criminals living and operating in local communities," Mr Clarke said.
"They use their profits to fund their lifestyles, and engage in criminal behaviour well beyond the sale of illicit tobacco."
ABF Superintendent Sasha Barclay said criminal syndicates are increasingly turning to cultivating their own illicit tobacco crops in response to increased detection and seizure at the border.
It has been illegal to grow tobacco in Australia for more than a decade. If convicted, growing tobacco carries a maximum penalty of up to 10 years' imprisonment.
