Police confiscated 104 bags of brown sugar from Burani village in Kwale county on Wednesday.
The commodity packed in 50-kg bags was found in a thicket hidden by building stones at Mlazani forest.
County Police Commander Mr Tom Odero said they made the discovery after they were tipped off by members of the public.
Mr Odero said the sugar had been imported from Zanzibar. It was taken to Kwale police station and a probe started.
"We have launched investigations to establish how the illegal sugar found its way into the country," he said.
He added that samples will be taken to the Government Chemist for testing.
On August 24, police impounded a consignment of illegal sugar in Wajir. County Commissioner Loyford Kibaara said two lorries carrying 400 bags of sugar were found in Habaswein.
The seizure came two days after three lorries with 36 tons of illegal sugar were impounded in Qahira, several kilometres from Wajir town.