Officials said bundles of counterfeit €500 notes were found after a tip-off.
The exact size of the haul will not be known until the notes are fully dried.
Three Bulgarians have been arrested and a number of weapons seized. One of the people arrested, the owner of a printing company, had already been sentenced to six years in prison for counterfeiting money.
Chief prosecutor Sotir Tsatsarov said the find was "one of the largest amounts of counterfeit euros ever encountered".
He said the fakes were "of an extremely high quality".
But another official said some of them did not carry holograms.
It happened at the Mechka reservoir near the town of Purvomai in southern Bulgaria.
The European Central Bank is due to phase out the €500 note because of fears that it helps criminal activities.
In 2013, Portuguese police seized €380,000 in fake €200 notes of "exceptional quality".