Authorities say the drugs were hidden in plastic barrels imported from Turkey in February, which were part of a larger shipment of food originally from northern Iraq.
Each of the 25 barrels contained 20 litres of methamphetamine, with a total street value of $41.6 million.
Officers seized the drugs and replaced it with a harmless substance which was then delivered to a business in Clayton, in Melbourne's southeast.
Fawkner man Elias Hamwi, 43, was arrested after search warrants were carried out at homes in Fawkner and Bentleigh East on Wednesday.
Two gel blaster pistols and mobile phones were taken during the raids.
Police allege Hamwi has links to Middle Eastern organised crime.
He was charged with importing a commercial quantity of a border controlled drug and attempting to possess a commercial quantity of a border controlled drug, offences which have a maximum penalty of life imprisonment.
He faced the Melbourne Magistrates Court on Thursday and did not apply for bail.
Methamphetamine is a highly addictive substance that can be turned into ice and speed, making it the most commonly used illicit substance in Australia.
Australian Federal Police Detective Superintendent Anthony Hall said the package was driven from Northern Iraq into neighbouring Turkey and then delivered to Melbourne through a shipping container.
He didn't rule out making further arrests as the investigation was still active in Turkey and Oman, noting established connections between Middle Eastern organised crime and criminals operating in eastern Australian states.
"Each successful drug importation by criminal syndicates earns them huge profits that funds the next illegal venture," Detective Superintendent Hall told reporters.
"It also contributes to them living lavish lifestyles while law abiding Australians save hard to pay their bills."
He said the 500 litre haul was the second biggest liquid methamphetamine seizure in Australia.
Australian Border Force Superintendent Tori Rosemond described it as brazen offending.
"People think they're going to get away with it. They tried to substitute goods to make it look like something else," Superintendent Rosemond said.
"Our officers are highly trained and we'll pick that up on X-ray every time and on physical examination it was quite evident it was not vinegar."
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