It stretched for 250ft under the border from an abandoned building in Nogales, Mexico, to another city also called Nogales in Arizona.
The tunnel, which was 15ft below the surface, was discovered by US Border Patrol agents and is the most elaborate of eight found in the area since October.
Chief Patrol Agent Randy Hill said: “This tunnel is more sophisticated than other recently discovered tunnels. They chiselled through solid rock and then installed electricity, lighting, water pumps, and ventilation.
“It is a prime example of the risks traffickers will take and the lengths they will go to smuggle contraband into our country.” Arizona is a popular destination for powerful Mexican cartels smuggling marijuana, cocaine, heroin and methamphetamines north into the United States.
As security has been tightened along the border in recent years drug smugglers have increasingly gone underground to evade detection.
The tunnel was chiselled through solid rock and had electricity, lighting, water pumps, and ventilation.
The tunnel ran under the Arizona border from Mexico.