The FBI in December received a tip that the 22-year department veteran was stealing confiscated drug money.
An undercover operation Tuesday involved $100,000 in bundles put in a vehicle. Investigators say the 42-year-old McAllister searched the vehicle, found the cash and while transporting the money was videotaped slipping a bundle into his pants.
Investigators say money that McAllister allegedly used to buy a watch at a store matched some of the missing cash.
Mesquite police say they were aware of the federal investigation and will review cases involving McAllister.