Police seized 325 boxes of illegal fireworks last Friday after receiving a tip-off.
Authorities in Jinshan District said they were told early this month that a man had been buying fireworks and firecrackers to sell in Shanghai.
The male suspect, surnamed Li, was using a truck to transport the explosives.
After uncovering the vehicle's plate number, police managed to stop the truck near the Xinzhuan Highway toll gate of the G15 Expressway in Songjiang District at about 11pm last Friday.
The police said the 325 boxes of explosives would be safeguarded by the fire service until they could be safely destroyed later.
Li confessed that he bought the explosives in Pingxiang, Jiangxi Province, to sell them in Shanghai without a permit, police said.
He faces the criminal charge of running an illegal business, according to police.
In Jiading District, police seized 30 boxes of illegal fireworks and firecrackers in a grocery shop in Anting Town on Monday.
The shop owner would be detained for 15 days for the offense, police said.
Shanghai bans the possession and use of fireworks and firecrackers within the Outer Ring Road, and residents are encouraged to report the illegal production, sale, storage, transport and use of explosives to the police by calling 12345, 96119 or 110.