They discovered the stash at a warehouse near the coastal resort of Limassol on Thursday, hidden in the fuel tanks of electricity generators.
Police chief Zacharias Chrysostomou said the shipment originated from South America, probably Chile.
It had passed undetected through several European countries –- including the Netherlands — before reaching the Mediterranean holiday island, he said.
“This is the biggest quantity of cocaine located in our country. Until now the largest find was 100 kilos in March 2015,” said Chrysostomou.
Police believe most or all of the stash was for re-export.
The 53-year-old Greek Cypriot warehouse owner was detained and an arrest warrant has been issued for the director of the company that ordered the generators. He is believed to be out of the country