Donegaldaily.com understands Gardai were alerted to the factory when a large amount of electricity was being used by the tenants of the house at Beechwood Avenue.
We understand that the windows on the house were blacked out and a range of elaborate equipment was found inside.
It is believed at least two foreign nationals are being quizzed by Gardai who had the house under surveillance for some time.
It is believed the value of the 55 cannabis plants are worth more than €22,000.
A quantity of esctacy was also recovered.
Local anti-drugs campaigner PJ Blake appealed to people living in housing estates to be careful of tell-tale signs that cannabis factories are operating across Donegal.
“My information is that there are a number of these so-called cannabis factories operating in housing estates and in remote areas of Donegal.
“I would ask people to be vigilant and to contact their local Gardai if they notice any suspicious activity at any house,” he said.