500 kilograms (1,102 pounds) of explosives were found in Egypt three kilometers (1.86 miles) away from the border with the Gaza Strip, a security official said.
The TNT explosives were found in sacks, covered with bushes in the border city of Rafah just three kilometers (1.86 miles) away from borderline, said a security official speaking on condition of anonymity because he was not authorized to speak to the media.
The explosives, packed in 15 plastic bags, were prepared to be smuggled into the Gaza Strip, the official said. Authorities believe other sacks of explosives were already smuggled into Gaza.
No one was arrested but troops were searching for smugglers, the official said.
Smuggling across the border into Gaza or Israel has long provided a livelihood for some Bedouins in Egypt's Sinai Peninsula.
Weapons, cigarettes and foreigners seeking jobs in Israel are all taken surreptitiously across the border.
Israel has repeatedly accused Egypt of not doing enough to stop weapons smuggling into Gaza, particularly through tunnels. Cairo recently said it would make a greater effort to stop smuggling.