Police found a large amount of drugs during a search of Nelly's tour bus as it passed through a Texas border crossing.
A member of his entourage was also arrested.
Nelly was on the bus when it was stopped. Officers did a routine check and found over 10 pounds of marijuana, 36 small bags with heroin and a loaded gun.
One of the passengers in the bus admitted the drugs and gun belonged to him, so he was arrested.
Nelly said he had no clue the bus was loaded with heroin and marijuana.
Nelly told TMZ: "It is my understanding a member of my staff made an unfortunate decision to bring unlawful materials onto our tour bus that resulted in his arrest this morning."
"Neither I nor anyone else on the tour bus was aware of his decision to bring these on board. Law enforcement officials did not press charges against anyone other than that individual."
The border stop in Texas is known for busting celebrities with drugs. Last month, Fiona Apple got arrested at the checkpoint after police found marijuana on her tour bus. Other stars caught in the past at the stop include Snoop Dogg and Willie Nelson.