Some of the products contained enough harmful chemicals to cause organ damage, officials said.
The businesses were fined Â£168,579 for selling unsafe cosmetics, the majority of them skin lightening products.
They contained dangerous and prohibited levels of hydroquinone, mercury or corticosteroids.
London Trading Standards said officers found and seized "hundreds of thousands" of the products in a coordinated campaign.
They said prolonged use of the products could have resulted in health problems ranging from skin thinning and discoloration, to organ damage and cancer in the long term.
One of the products, called Grace Duo, contained 18% of the bleaching agent hydroquinone, which Trading Standards said was thought to be the highest amount ever found.
Another soap product called Faiza Beauty Cream contained 0.54% of toxic mercury.
Five London boroughs have prosecuted 17 company directors and their 15 companies, with an average fine of Â£11,239.
Trading Standards said it had identified at least 15 online sellers using eBay to offer prohibited skin lightening products, with efforts currently under way to locate them.
Officers in Waltham Forest recently seized more than 3,000 products from one such seller.
Company bosses who sell banned cosmetic products can be fined up to Â£20,000 per offence and sent to prison for up to one year.
Fifteen London businesses selling unsafe cosmetics products have been fined in a crackdown by Trading Standards.