"We carried out a raid on a residence in Owerri following an intelligence report and rescued 16 expectant mothers," Imo State police spokeswoman Joy Elomoko told AFP.
"The girls were between 14 and 19 years old and in different stages of pregnancy."
The male owner of the home, who was arrested, had registered it as a non-governmental organisation promoting women's and children's issues, Elomoko added.
An unlicensed automatic pump action shotgun was also recovered during the raid.
Elomoko said the rescued women and girls told officers that they were each offered 100,000 naira (632 dollars, 466 euros) to sell their babies after delivery.
An investigation was also under way over a case of a missing baby from the illegal home.
"We found out that the suspect could not explain the whereabouts of a baby that was recently delivered in the home," the spokeswoman said.
"We are suspecting that the baby might have been sold for (black magic) rituals," she said, adding that the suspect would be taken to court after police investigation.
Nigerian security agents have uncovered a series of alleged baby factories in recent years, notably in the southeastern part of the country.
Last month, six pregnant teenage girls were freed in a raid on an illegal clinic in the oil city of Port Harcourt.
Human trafficking is widespread in west Africa, where children are bought from their families to work in plantations, mines and factories or as domestic help.
Others are sold into prostitution, and less commonly they are tortured or sacrificed in black magic rituals.
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