Police said tens of thousands of copies of the erotic films were sold in the capital, Algiers, and that many customers bought the discs in good faith, innocently unaware of their contents.
Pornography is strictly forbidden in the North-African Muslim country.
Police said in a statement: "Apart from illegally producing and selling forbidden products, they blasphemed against our religion, misled their buyers, and hurt their religious feelings."
Special officers in the capital have seized the DVDs at all outlets found to be trading them. Several of the shops have been closed, and their owners arrested. The investigation is ongoing.