The Ministry of Public Security said 1,168 cultural relics worth more than 500m yuan ($80m; £52m) had been found.
The artefacts are thought to be illegally excavated in Niuheliang, a Neolithic archaeological site in north-eastern Liaoning province.
The ministry said the activities of the looters had severely damaged the site.
Among the artefacts was a coiled jade dragon, one of the earliest known depictions of the mythological creature, authorities said.
Unesco says the Niuheliang archaeological site, which dates back 5,500-5,000 years, was a burial and sacrificial centre in the late Hongshan period.
State media described the recovery as the biggest operation of its kind since the founding of modern China in 1949.
The date of the recovery operation was not provided, but the ministry said in a statement that 1,000 police officer were involved.
The looters were said to be split into 10 gangs that were responsible for everything from the excavation to the selling of the relics, according to China Daily.
Four archaeologists are also thought to be involved, the newspaper said.
"Artefacts are sold at a fast speed and traded frequently in a short time," said Cai Binghui, a police officer who was involved with the case according to China Daily.

England's Selby, 33, who beat Ding 18-14 in May's Crucible final, took a 3-1 lead before his Chinese opponent hit back, knocking in a 75 break for a 6-3 advantage going into the interval.
Back came Selby with a 76 and century before he levelled the match at 6-6.
But Ding, 29, took control once more, recording breaks of 97 and 63 en route to completing his win on home soil.
All results from the Shanghai Masters here.
Police in China have taken 175 people into custody in what authorities are calling the country's biggest ever operation to recover stolen artefacts.
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Ding Junhui won the Shanghai Masters for the second time with a 10-6 victory over world champion Mark Selby.