The operation was still under way early today, but Detective Senior Sergeant Kallum Croudis said more arrests were imminent.
He said the North Otago property was under police guard and that another three Dunedin properties could be linked to the raid.
Witnesses contacted the Otago Daily Times soon after 9.30pm to say police, ambulance, and fire crew were gathered at the bottom of Fulton Rd and Malvern St. Other police vehicles were seen in Islay St, off Fulton Rd.
Det Snr Sgt Croudis said about 20 police were involved in the operation, which was part of a month-long investigation by Mosgiel CIB into the use of methamphetamine in the North Otago region.
Members of the armed offenders squad detained the men. Their car was recovered and a decontamination unit was on standby, Det Snr Sgt Croudis confirmed.
Two 28-year-olds and a 35-year-old man were due to appear in the Dunedin District Court today on charges related to the raid.
