The machinery was capable of producing 250,000 illicit cigarettes per hour
Eleven men have been arrested by gardaí after a joint operation with Revenue to dismantle an illicit cigarette factory.
The discovery was made in Jenkinstown, Co Louth on Thursday morning.
This is the first time a commercial illicit cigarette production plant was discovered in the State.
Gardaí say the factory was in full operation when Revenue officers and the Armed Support Unit of An Garda Síochána entered the premises just before 8.00am.
The 11 men detained are all from Eastern Europe and aged in their late 20s to late 50s.
They were arrested and brought to Dundalk garda station under Section 4 of the Criminal Justice Act.
Revenue officers found more than 40 tonnes of tobacco, components for the manufacture of cigarettes and approximately 25 million cigarettes - branded 'Mayfair' - ready for distribution.
The gardaí say: "This was a sophisticated self-contained operation with machinery capable of producing 250,000 illicit cigarettes per hour and pre-processing, processing and packaging facilities, along with living quarters."
Illicit cigarettes that originated in this factory have previously been seized in both Ireland and the UK.
If the finished cigarettes seized at the factory had reached the Irish market, the estimated loss to the exchequer would have been approximately €12m.
Investigations both nationally and internationally are ongoing.