Two Vietnamese men were detained suspected of smuggling, authorities said on Thursday.
The illegal cargo was discovered after officers at the Ugandan tax authority (URA) scanned three 20-foot (six-meter) containers carrying timber logs which had crossed the border from South Sudan.
After growing suspicious, a team secretly tailed the cargo to a warehouse in Kampala and made the bust.
"Logs were hollowed out and filled with ivory and pangolin scales then resealed with tons of melted wax to disguise the contraband," URA spokesman Vincent Seruma told AFP.
"In a single container there were more than 700 pieces of ivory and more than 200 pangolin scales but we expect to recover thousands of scales," he added.
The full value of the cargo has yet to be established but the agency estimated at least 325 elephants would have been killed to acquire the ivory.
Seruma said the traffickers were part of a "very dangerous racket" which takes advantage of conflicts in eastern and central Africa to poach endangered species.
The URA said it believed the ivory and pangolin scales had been packed at a smuggling centre in Democratic Republic of Congo.
"These huge consignments often come from DRC or Central African Republic taking advantage of the lawlessness there. The level of smuggling through Uganda is high," Seruma said.
The URA tweeted that the two men arrested will be charged with failing to declare prohibited items and concealment of goods.
"We believe they planned to bribe their way to their final destination so we are investigating the shipping agent and other contractors," the agency said.
The illegal ivory trade is the third most profitable form of trafficking after narcotics and weapons.
Traffic is driven by demand in Asia and the Middle East, where elephant tusks are used in traditional medicine and ornamentation.
Poaching has seen the elephant population fall by 110,000 over the past decade to just 415,000 animals, according to the International Union for Conservation of Nature.
The little-known pangolin is the world's most trafficked and poached mammal because of the demand for its meat and scales.
The scales are often used in traditional Chinese medicine and its meat is eaten in several countries in Asia and Africa.