At the centre of the inquiry was a Toronto-based firm that allegedly sold DVDs and streamed videos of naked boys in Germany, Romania and Ukraine.
Azov Films marketed the footage as "naturist" and claimed they were legal in Canada and the US.
The films were distributed in 94 countries, police said.
More than 100 arrests were made in Canada, 76 in the US and 164 in other countries during the investigation code-named Project Spade,.
Doctors and school teachers were among those detained, a Toronto police spokeswoman said.
The head of the company, identified as Canadian Brian Way, 42, has been in custody since his arrest in May 2011, following an undercover operation.
He is charged with 11 different offences including possession of, and import and export, of child pornography.
The Toronto Police Service Child Exploitation Section (TPS) was able to determine the identities of the customers from the Azov Films website.
Among the other countries involved in the investigation were Australia, Spain, Mexico, South Africa, Norway and Ireland.
Police described how undercover officers had discovered graphic images of child sexual abuse being shared from an internet connection in Toronto in October 2010.
US investigators then joined the inquiry because many of the films were being exported to addresses in America. Seven months later, a series of raids took place across Toronto, including a site owned by Azov Films and Brian Way, police said.
"It is alleged that officers located hundreds of thousands of images and videos detailing horrific sexual acts against very young children - some of the worst they have ever viewed," a police spokeswoman told reporters.
Please pray for the children who have been abused in the making of these images and videos. Pray that they would get the help they need to heal, the physical, emotional, psychological, and spiritual help. Pray that they would learn and experience what real love is.
Also, please pray for those arrested to be released from their demons, to repent and turn to God. Also pray for their families who will go through very difficult times. Pray that the enemy would not be permitted to use this against them.