The drugs were found after gardaí stopped a vehicle at the Donore Road Industrial Estate in the town just before 1pm this afternoon.
Packages containing white powder, understood to be cocaine, were found during a search of the vehicle.
Gardaí estimate that the 20kgs of cocaine discovered is worth around €1.4m.
A man in his 30s was arrested and is being held at Drogheda Garda Station for questioning.
The search was part of an intelligence-led operation under Operation Stratus, which was set up a year ago to tackle criminality in Drogheda.
Gardaí say the operation is ongoing.