The health ministry has banned sales of the counterfeit toothpaste and seized thousands of boxes containing the potentially lethal ingredient.
Local radio reports indicate that the majority of the seizures occurred in the south of the country where 13,000 boxes were removed from the shelves.
Although there have been no reports of illness if the toothpaste does contain diethylene glycol - a chemical usually used in anti-freeze, it poses a serious health risk and can prove fatal in large doses.
The fake toothpaste is labelled 'Colgate Maximum Cavity Protection,' but it is not produced by the global oral care brand.
The counterfeits are often distinguishable thanks to some startling labelling errors.
Some of the tubes on sale in the Mozambique capital Maputo gave expiry dates of the 32 nd and 34 th of the month.
While the seized toothpaste is labelled 'made in South Africa,' the true origin of the fakes has yet to be confirmed.
Fake toothpaste from China has found its way into shops in numerous countries across North and South America and Asia in recent months.
Back in May the FDA first said it was blocking all consignments of toothpaste from China at US borders.
The FDA said it thought its block would mainly affect grey market imports from China, which are often sold in the North American market illegally or at discount stores.
Mozambique is particularly susceptible to counterfeit cosmetics because there is no regulatory framework covering the industry and beauty products are usually sold by informal traders at outdoor markets.
Colgate is the most popular brand of toothpaste in Mozambique and many people are switching to other products following the scare, according to the BBC.