The unit, on Cable Street, was packed with vehicles and car parts, including several engines that have been cut from stolen vehicles.
These include Mercedes cars stolen in July from Bristol and Wolverhampton respectively, a BMW M4 taken last November in a car-key burglary in Cheltenham and one taken from a BMW motorbike stolen on 20 June in Codsall.
Officers executed a search warrant at the Central Trading Estate unit, Cable Street in Wolverhampton, at 3.50pm on July 27.
Police had been informed of suspicious activity at the site and concerns were raised that it was potentially handling and dismantling stolen cars.
No arrests have been made yet while officers continue to gather evidence at the unit and liaise with vehicle manufacturers to establish the identity of other seized parts.
It comes after another chop shop was found at an industrial estate unit in Hickman Avenue, Wolverhampton in July.
Inside, officers found a £100,000 Range Rover SVR taken from Solihull the previous day, plus a red Range Rover driven away from a house in Coleshill overnight between June 26 and 27.
Wolverhampton Police Chief Inspector Will O’Connor, said: "This appears to be a major chop shop discovery.
"The unit was packed with car parts and initial examination of engines has shown several taken from stolen vehicles.
"Chop shops provide a key outlet for thieves to dispose of stolen vehicles quickly, so identifying and closing them down helps us make it more difficult for offenders and tackle the wider issue of car crime.
"The warrant was prompted by community intelligence. Information from the public is crucial in our efforts to close down chop shops.
"We always take information seriously and will always act where appropriate to close down chop shops and make arrests."
"If you suspect a unit or garage is being used to handle stolen vehicles then please message us on Live Chat through our website or call the independent charity Crimestoppers anonymously on 0800 555111."