Marine police who boarded the 499-ton Solas on Sunday found 138 people on board - 116 men, 13 women and nine crew.
They said 128 of the illegal immigrants - squeezed into three tiers of makeshift wooden bunks in the hold - were Chinese, from Fujian and Shanghai, and one from Hong Kong. None had travel documents, and they would probably be returned home.
'Each of the illegal passengers had apparently promised to pay up to dollars 30,000 (pounds 20,000) to get to the United States,' said Chua Chin Kiat, director of operations at the Home Affairs Ministry.
The Solas was originally known as Galahad, of Taiwanese ownership and registered in Kingstown, capital of St Vincent and the Grenadines in the Caribbean.
It left Hong Kong on 25 November bound for New York. Police said it spent eight days at the Taiwanese port of Keelung for repairs, where the bunks may have been installed. The passengers were taken on board at Rock Island, near Keelung.
The smuggling voyage started to go wrong after an unclear distress signal was received in Singapore on Friday indicating that armed men were on board.
'Whether or not some members of the crew withdrew from the plan to smuggle the illegals we are not sure. But it is clear that there was some dispute and a message was sent out which alerted us,' Mr Chua said.
After the first message, the ship maintained radio silence until it entered Singapore waters after nightfall on Saturday. A radio call then said it was bound for Cape Town but five of the nine crew, including the captain, wanted to disembark. The captain was identified as a Burmese, U Tin Hia.
Police boarded the Solas without meeting any resistance after it stopped its engine in a busy shipping lane, against the instructions of the port authority.
Smuggling syndicates that specialise in taking illegal Chinese immigrants to the United States have become increasingly active in recent years, Singapore police say. Most of them operate from Hong Kong, Taiwan and Thailand.
The Solas is the latest in a series of recent incidents. In August, at least 150 landed on the southern coast of Haiti while apparently attempting to reach the US. Fishing boats and small cargo vessels were used to carry more than 100 people on most voyages, said Khoo Boon Hui, director of the Criminal Investigations Department.