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Footage broadcast by state-owned Vietnam Television (VTV) this week showed dozens of large bags containing the used contraceptives scattered across the floor of a warehouse in the southern province of Binh Duong.
Police said the bags weighed more than 360 kilograms (794 lbs), equivalent to 345,000 condoms, according to VTV.
The owner of the warehouse said they had received a "monthly input of used condoms from an unknown person," state newspaper Tuoi Tre reported.
A woman detained during the bust told police that the used prophylactics were first boiled in water then dried and reshaped on a wooden phallus before being repackaged and resold.
VTV said it was not clear how many of the recycled condoms had already been sold. The detained woman said she had received $0.17 for every kilogramme of recycled condoms she produced.
Neither she nor the owner of the warehouse were available for comment.