Six tones of cocaine were seized this week off Mexico’s Pacific coast as military authorities worked with information from US intelligence services.
The cocaine was carried by a 10-metre long, green fiberglass craft designed to travel just beneath the water, leave almost no wake.
The annexation is called one of Mexico’s largest maritime drug seizures, and the first time the country has witnessed drug smugglers using a submarine, the navy reported.
More than 200 packages of drugs, tightly wrapped in black plastic, were laid out on the dock by the army where the vessel was hauled in on Friday.
An aid package of more than $411 million to fight drug gangs is being discussed this week with the US Homeland Security Secretary in Mexico.
Yet its Secretary, Michael Chertoff, said the US had a minor role in the operation.
"We shared information with the Mexican navy, but the Mexican navy acted alone. It was actually their seizure, their marines, their helicopters and naval vessels that captured the submarine," he said.
Four Colombians aboard the submarine told the navy they had navigated up the Pacific coast from Colombia.
Diesel-powered drug submarines travel up to two weeks to reach Central America and Mexico. The drugs are then hauled overland into the United States.
Mexican militia raided the submarine on Thursday after they spotted it from a helicopter. They detained the crew and brought them and the vessel back to the Pacific port of Salina Cruz in Oaxaca state.
Chertoff said the troops swooped down onto the craft using ropes from a hovering helicopter before the crew had time to sink the ship.
"This is going to force us to increase surveillance," Vice Adm. Jose Maria Ortegon said in Salina Cruz.
The government has made several huge drug seizures by deploying thousands of troops to trafficking hot spots after President Felipe Calderon took office in December 2006.
But drug trade specialists say troops and police are failing to tackle drug gangs' financial networks and go after money launderers, which they say would do more to weaken the cartels.
About 1700 people have been killed in drug gang violence in Mexico this year alone.