Children foraging for firewood outside Kabanga village near Mpigi town, about 40 kilometres (24 miles) west of the capital Kampala, made the grisly discovery on Monday.
Confirming the development on Tuesday, regional police spokesman Majid Karim said residents told officers there were metallic boxes containing what appeared to be skulls buried in a shrine.
“We swiftly moved in and dug up the place, and so far we have recovered 17 human skulls,”
“We are conducting more excavations to ensure there are no more skulls other than what we have so far recovered,” he said.
He added that the remains were being examined to determine their age and s3x, as well as when they may have been buried.
He urged the public to remain calm, saying some residents had been left in shock.
Officers will “investigate the matter to establish the circumstances surrounding the recovery of these skulls and who could be behind this act”, Karim said.
It is not clear how the skulls ended up at the site.
Police said the suspected owner of the site is on the run, having been linked to a separate case involving the murder of a prominent traditional Baganda leader, entrepreneur Daniel Bbosa.
Hired gunmen reportedly carried out the killing in Kampala as Bbosa returned home from work in February this year.
Although densely populated, the Mpigi district remains semi-rural, with agriculture dominating local trade.
Coffee and bananas are the major cash crops and staple foods, and there is a major road linking the villages to Burundi, the Democratic Republic of Congo, Rwanda and Tanzania.