Spanish national Samuel Diaz Pizarro 35, was arrested by RGP Drug Squad officers last night in the area of the construction site at the rear of Eastern Beach.
Acting on information received, police officers were carrying out observations in the vicinity when the suspect was stopped just before midnight.
A subsequent search revealed that the man was in possession of a package containing approximately 41 grammes of cocaine.
Diaz Pizarro was arrested and later charged with several offences: possession, possession with intent to supply and importation of approximately 41 grammes of cocaine; obstructing police and entering into Gibraltar other than through an authorised entry point.
The man will be appearing in court today.
The street value of the cocaine is approximately £2500.