Santa Cruz County Sheriff Tony Estrada in Nogales, Ariz., says the Mexican military discovered the tunnel this week in downtown Nogales, Sonora, just across the border.
He says the tunnel originated in a two-story home in Mexico and stretched about 100 meters. Estrada says the tunnel was elaborately built with electricity and ventilation.
U.S. Border Patrol spokesman Victor Brabble says the tunnel did not cross into the U.S.
Similar tunnels have been used for years by criminals for smuggling people and drugs across the border.
More than 70 such passages have been found since October 2008, most concentrated along the border in California and Arizona.