Andrew Fahie was arrested at a Miami airport on Thursday along with the managing director of the British overseas territory's Ports Authority, according to the complaint.
A Drug Enforcement Administration (DEA) complaint says Fahie had agreed to allow the informant, who was posing as a member of Mexico's Sinaloa drug cartel, to use British Virgin Islands' ports to ship cocaine in return for $US500,000 ($A700,000).
British Virgin Islands governor John Rankin announced the arrest, adding: "I realise this will be shocking news for people in the territory. And I would call for calm at this time."
Deputy Premier Natalio "Sowande" Wheatley will remain acting premier indefinitely.
DEA Administrator Anne Milgram said that the arrests should send a clear message that "anyone involved with bringing dangerous drugs into the United States will be held accountable, no matter their position".
The DEA's complaint shows that the investigation, based on observations and recordings from the confidential informant, started in October.
According to the DEA complaint, an informant claimed in meetings with Fahie, BVI ports managing director Oleanvine Maynard and her son, Kadeem Maynard, to be a cartel member looking to move thousands of kilos of Colombian cocaine through Tortola island and eventually to Puerto Rico for export to New York and Miami.
"Fahie agreed to allow the confidential source to use the ports to ship his cocaine," according to the complaint, and he requested a $US500,000 upfront payment in return.
The premier also requested help in paying down an $US83,000 debt to a man in Senegal who had "fixed" some political issues for him.
Fahie was arrested at Miami-Opa-locka Executive Airport after being separately shown designer shopping bags in a private plane that ostensibly showed $US700,000 for him and Oleanvine Maynard, the complaint says.
Fahie, Maynard and her son were charged with conspiracy to import cocaine and conspiracy to launder money.
British Foreign Secretary Liz Truss said in a statement she was "appalled" by the allegations.
Fahie's arrest, she said, demonstrated the importance of a recently concluded inquiry into allegations of corruption and abuse of office on the islands. The commission's report has not yet been published.
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