The Vancouver Island Emergency Response was called to back up Nanaimo RCMP's municipal drug unit on a search warrant Tuesday.
The search was conducted in a residence in the 100 block of Nicol Street at about 10 p.m.
Emergency Response Team members were called out over concerns there were weapons in the residence.
No weapons were found, but police arrested three adult men and one teenage female and confiscated a large quantity of $100 and $20 counterfeit bills, heroin and marijuana.
Sgt. Sheryl Armstrong, Nanaimo RCMP spokeswoman, said she did not have specific information about the ages or identities of the suspects, details about the quantities of drugs and counterfeit money or what charges are pending.
"The investigation's still ongoing," she said. "I don't have the information. This all just happened and [the investigators] are still really busy."
The suspects are being held in custody pending further investigation.
Armstrong said it was gratifying to get a large quantity of counterfeit money out of circulation during the holiday season when merchants might not take the extra time necessary to carefully check the authenticity of bills.