About 475 workers were arrested, according to US immigration officials, the largest single-site enforcement operation in the US Department of Homeland Security's (DHS) history.
President Donald Trump's administration has been escalating a crackdown on immigrants, disrupting businesses around the country, even as the White House has encouraged more inflows from foreign investors.
The US and South Korea have been at odds over the details of a trade deal that includes $US350 billion ($A535 billion) of investments.
At a summit last month, South Korea pledged $US150 billion in US investments - including $US26 billion from Hyundai Motor.
Homeland Security officials said the workers arrested at the Ellabell, Georgia site were barred from working in the US after crossing the border illegally or overstaying visas.
The investigation took place over several months, Steven Schrank, special agent in charge of investigations for Georgia, said during a press briefing.
"This was not an immigration operation where agents went into the premises, rounded up folks and put them on buses," he said.
Schrank said there was a network of subcontractors on the site; a Hyundai Motor spokesperson said none of the people detained were employed directly by the car maker, which complies "with all laws and regulations wherever we operate".
The workers were being held at ICE's Folkston, Georgia detention facility, Schrank said.
Most of the 475 people are South Korean citizens, he said.
A spokesperson at Hyundai's battery joint venture partner, South Korean battery maker LG Energy Solutions, said in a statement it was co-operating and had paused construction work.
The facility, a joint venture between LGES and Hyundai Motor, was due to start operations at the end of this year, according to LGES.
The White House said on Friday that "any foreign workers brought in for specific projects must enter the United States legally and with proper work authorisations."
South Korea's Foreign Ministry expressed regret and concern about the raid.
"The economic activities of our companies investing in the United States and the interests of our citizens must not be unduly violated during the course of US law enforcement," ministry spokesman Lee Jae-woong said in a statement on Friday.
Social media video showed a man wearing a vest with the letters HSI, an acronym for Homeland Security Investigations, telling workers in yellow safety vests: "We have a search warrant for the whole site. We need construction to cease immediately. We need all work to end on the site right now."
The US Department of Justice in a statement said several people tried to flee during the raid.
Some had to be fished out of a sewage pond on the site, DOJ said.
Hyundai said its production of electric vehicles at the sprawling site was not affected.
