Detectives seized more than Sh1.5 billion in fake US dollars when they raided a house in Pangani, Nairobi County, on Tuesday.
The Directorate of Criminal Investigations (DCI) said the fake notes were found in a room at Eden House Flats, Pangani Shopping Centre.
They arrested a suspect identified as 29 year-old Yassin Ahmed Osman.
"Detectives stormed the house and conducted a search upon which a black bag containing the fake currency notes was found and confiscated," the DCI reported via Twitter.
"The suspect was placed in custody pending arraignment."
The DCI said officers from Starehe were pursuing others involved in the crime.
Many cases of the seizure of fake currency notes have been reported by the DCI in the past.
In July, police confiscated fake $10 million (Sh1 billion) and arrested three suspects in Fedha Estate, Nairobi.
In October 2018, a Kenyan and two foreigners were apprehended at Sandalwood Apartments in Westlands, Nairobi, where they found more than Sh1 billion in fake currency.
Kenyan Anthony Mwangangi and Chadians Abdalla Tamba and his son Abdoulaye were arrested at their three-bedroom apartment on Brookside Lane, where fake dollars and Euros were found.
As a result of these and other cases, involving local and foreign currency as well as electronic fraud, police stepped up the crackdown on people engaging in the crime.