A large cache of cocaine and heroin has been found on the Colombian navy's flagship, the Gloria.
The Gloria was to embark on a goodwill trip to the US and Europe
The discovery was made just as Peruvian President Alejandro Toledo was to tour the ship during an official visit.
The sailing ship, which is the pride of the national fleet, was also due to visit the US and Europe to try to promote Colombia's image abroad.
The incident is the latest in a series of scandals dogging the Colombian security forces.
President Alvaro Uribe called the incident a stain on the nation's honour and ordered the entire 75 crew members suspended.
Officials found 16.5kg (36lb) of heroin and 10kg (22lb) of cocaine hidden in the engine room of the historic three-masted ship.
The drugs would have been worth millions of dollars if sold on the streets of the US or Europe, correspondents say.
"The government would rather see the ship rot than let this type of crime continue rotting our national dignity," the government said in a statement.
The BBC's Jeremy McDermott in Medellin says the incident is the latest in a series of scandals which have seen generals and colonels sacked for corruption or incompetence and the army accused of being trigger-happy.
He adds that it will have done little to reassure the visiting Peruvian leader that the Colombian armed forces can do anything to stop the Marxist guerrillas who frequently cross into Peru and are now selling drugs along the frontier.