Neighbourhood officers approached a grey Mercedes-Benz parked up in Castle Gate at around 8.15pm on Sunday (26 February).
The officers had been looking for the vehicle following a report that it had been involved in drug dealing.
A man in the driver’s seat was asked to get out of the car so officers could conduct a search. The officers then found 29 large nitrous oxide cannisters and balloons, as well as £80 in cash and a small quantity of cannabis.
The man, aged 20, was arrested on suspicion of possession with intent to supply a psychoactive substance and class B drugs.
While in custody, officers searched a property linked to the suspect and found a large quantity of cannabis, drug paraphernalia and a large safe.
He was questioned and bailed pending further inquiries.
Sergeant Paul Whitehead, of the Nottingham City Centre neighbourhood policing team, said: “It is important people understand that inhaling nitrous oxide, or laughing gas, isn’t just harmless fun but could actually put their health at risk.
“Selling these cannisters is a crime and anyone who does this should expect to be prosecuted.
“We have arrested a suspect in connection with this incident and our inquiries are ongoing.”