The 30ft long, semi-submersible craft was discovered while under construction in Malaga on Spain's Costal del Sol last month.
It came as part of a wider drugs bust involving Europol and police in Britain, America, Colombia, the Netherlands and Portugal.
Spanish police chief Rafael Perez said the craft would have travelled 'into the high seas' if completed and met up with a 'mothership' to take the drugs on board.
Seized: This narco-submarine with two engines and three portholes was found under construction in a warehouse in Malaga as part of a wider drugs bust in Spain
Going inside: A police operative climbs into the craft which Spanish police say would have travelled into the 'high seas' to collect drugs from a 'mothership'
Perez said the vessel was 'like an iceberg', meaning that most of it would have been underwater and only the tip would have been visible.
'In practice, nearly all of it goes under water apart from the top, which is the only part of it that would be seen from another ship or a helicopter,' he said.
The police chief said the vessel had never sailed but would likely have taken drugs on board from a larger 'mothership' before making it way back to Spain.