Mr Steel said Drug Free Sport would be co-operating with police to investigate whether gangs were involved in the distribution of steroids and other banned substances to athletes in New Zealand.
He told MPs that there was some concern that steroid use was increasing in New Zealand gyms, and this could have a knock-on effect for sportspeople.
"I'm not talking about sport. I'm talking about across the community - there seems to be a culture around gyms, wanting to be beautiful and so on, and that's where steroids can help.
"The danger for us is that that brings more steroids into the country, into the market and athletes are in those same gymnasia and there's a potential that they may deliberately or not deliberately get involved with that."
Customs officials were picking up more performance-enhancing substances at the border.
Mr Steel said this could indicate that customs' detection methods were improving, or that a greater amount of drugs were coming into the country.
These substances were not illegal for non-sportspeople to use, but were illegal to import or prescribe.