Officers in the Sandveien area of Lerwick approached a van at around 12.45 pm on Monday, 24 May, following concerns from the police.
Following this, heroin with an estimated street value of £135,000 was seized nearby.
Two men, aged 46 and 47, have been arrested and charged in connection with the incident and are expected to appear at Lerwick Sheriff Court on May 25.
Detective Sergeant Bruce Peebles of Lerwick CID said: “This was a significant recovery of Class A drugs, especially for Shetland. I want to assure people that we are committed to tackling the sale and supply of drugs in our communities.”
Anyone with information or concerns about drug offences can contact Police Scotland on 101 or the independent charity Crimestoppers anonymously on 0800 555 111.