The Oscar-winning actor was found dead in his New York City apartment after an apparent overdose earlier this week.
Police said he was found on the bathroom floor with a syringe in his arm.
New York City police sources familiar with the investigation said 50 small bags of what appeared to be heroin were found in Hoffman's apartment.
Local media reported that police traced the heroin believed to have killed Hoffman and arrested four people during a raid on a building in the Chinatown district of Manhattan.
A police spokesman confirmed the arrests, but declined to confirm whether they were related to Hoffman's death.
A second spokesman earlier said that heroin found in Hoffman's apartment was not cut or mixed with fentanyl, a synthetic narcotic believed by health authorities to be responsible for scores of overdose deaths in recent months.
"There was no fentanyl found in the drugs," the spokesman said.
Hoffman, 46, had detailed his struggles with substance abuse in the past and last year he sought treatment after more than 20 years of sobriety.
Hoffman's best known films
Boogie Nights (1997)
The Big Lebowski (1998)
The Talented Mr Ripley (1999)
Almost Famous (2000)
Red Dragon (2002)
Cold Mountain (2003)
Mission: Impossible III (2006)
Charlie Wilson's War (2007)
The Master (2012)
Watch clips of Hoffman's quirkiest film roles.
Preliminary results of an autopsy are expected to be released soon.
Hoffman, who is survived by his partner Mimi O'Donnell and their three children, will be buried in a private memorial service, with a memorial planned for later this month.
Meanwhile, a trickle of subdued fans have continued to lay roses, photographs and beer outside…