The crackdown was part of a sting operation in which more than 40 police officers went shopping in recent weeks, purchasing allegedly mislabeled watches, handbags and sunglasses.
At a press conference with bags of seized merchandise stacked behind him, Mayor Michael R. Bloomberg called the area that includes Canal, Walker, Baxter and Centre Streets the "Counterfeit Triangle."
Police say they purchased watches labeled as Rolex for $80, a handbag labeled as Prada for $40 and similar mislabeled knockoff items sold at "discounted prices."
Bloomberg said the trade in counterfeit goods leads to turf wars and money laundering, The New York Times reported.
"It's organized crime," the mayor said, telling reporters the practice also robs the city of $1 billion in sales tax revenue each year.
No one was arrested during Tuesday's action, the report said, but shop owners, who had been warned of the investigation in early January, may be fined $1,000 per day they remained open after the warnings were issued.