Paul LePage described the dealers as "guys with the name D-Money, Smoothie, Shifty" and claimed "half the time they impregnate a young white girl before they leave".
The 67-year-old did not describe the race of the drug dealers during the town meeting in Bridgton and a spokesman said on Thursday he was not making a comment about race.
But critics have accused the governor of playing to people's racial fears.
Lance Dutson, a former CEO of the conservative Maine Heritage Policy Center, said: "This is one of the most blatantly racists statements he's ever made.
"One of the things that's offensive about it is that it's reminiscent of this fearmongering in American history that people would like to think is long gone."
Michael Alpert, president of the National Association for the Advancement of Colored People's Bangor chapter (NAACP) described the comments as "sad" and "foolish".
Mr LePage's chief of communications, Peter Steele, insisted the governor was not talking about race.
He said: "Race is irrelevant.
"What is relevant is the cost to state taxpayers for welfare and the emotional costs for these kids who are born as a result of involvement with drug traffickers.
"His heart goes out to these kids because he had a difficult childhood, too. We need to stop the drug traffickers from coming into our state."
The Republican governor is known for speaking his mind.
While on the campaign trail he said he would tell President Barack Obama to "go to hell", and told the Portland chapter of the NAACP to "kiss my butt" shortly after he was elected.
He has also compared the IRS to the Gestapo and called protesters "idiots".
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