Agriculture minister Tara Moriarty told parliament on Tuesday the ants were discovered at an unused council-owned site in South Murwillumbah on Friday afternoon.
She said authorities are exploring whether the ants may have been concealed in turf brought to the site from Queensland and whether biosecurity laws had been breached.
Fines of up to $2 million apply to businesses and up to $1 million for individuals, for breaches of the rules.
The NSW Department of Primary Industries confirmed on Saturday three red imported fire ant nests were found in South Murwillumbah, 13km from the Queensland border in the state's northeast.
It is believed to be the most southern spread of the pests so far.
A biosecurity order was put in place from Friday evening limiting the movement of soil, mulch, turf, plants, and other similar materials being sold in South Murwillumbah to within a five-kilometre radius.
"That's tough for the businesses that are in that zone but we are working closely with them," Ms Moriarity said.
Sniffer dogs are being used to survey potentially affected businesses, with no further outbreaks of ants detected so far.
Manager at Murwillumbah Landscape Supplies, AJ Love said he is facing the prospect of laying off staff before Christmas.
"We've gone through two major floods since 2017 and then COVID, so we're just starting to get back on our feet and here we go again," he said.
Mr Love said there is no clear time frame for how long the impacts will last.
"The only contact we've had with the DPI apart from today when they turned up to shut us down was the contact we initiated ourselves," he said.
Ms Moriarity said a plan was in place prior to the outbreak to deal with the ants should they be discovered in NSW.
"We've expected that this would be something that would occur given how close they have been to the border," she said.
The government had also set aside $95 million in financial support to contribute to the national eradication plan, she said.
"We needed to make sure that we are doing everything we can ... to protect our state," she said.
"These are dastardly little critters. They do attack livestock and they do swarm they can kill people."
