Salvatore Lo Piccolo, who magistrates believe is the Sicilian Mafia's new boss of bosses, was arrested on Monday after nearly a quarter of a century on the run, police said.
Lo Piccolo, 65, was arrested with his 32-year-old son, Sandro, and two other Mafia bosses.
The four are among the top 30 most wanted Mafia suspects in Italy and were seized in a raid on a country house outside the Sicilian capital Palermo where they were holding a summit.
Police fired a few shots during the operation but no one was injured. As he was being arrested, the younger Lo Piccolo told his father: I love you, Dad, according to local media reports.
Magistrates believe the elder Lo Piccolo, whose Mafia nickname is the Baron, took over the reins of the crime organization after the arrest last year of former boss of bosses Bernardo Provenzano.
Interior Minister Giuliano Amato said the latest arrests, following that of Provenzano, showed the Italian state was able repeatedly to dismantle the leadership of the Sicilian Mafia.
And no organization can survive for long when it is continuously deprived of its leadership, he said.
The arrests took place on the day Sicilians pay tribute each year to the victims of the Mafia, mostly magistrates such as Giovanni Falcone and Paolo Borsellino, who were killed by bombs in 1992.
We are really pleased with this operation because these people are not just fugitives but Mafia chiefs who were wielding their power, anti-Mafia magistrate Francesco Messineo told the Italian news agency Ansa.
Prime Minister Romano Prodi hailed the arrests as a success for the state ... and all honest citizens.
Lo Piccolo began his crime career as a bodyguard for a Sicilian mobster and worked his way up the organization until he took over after Provenzano's arrest in 2006. He has been on the run since 1983.
After Provenzano's arrest Lo Piccolo fought for the Mafia's leadership against another contender, Matteo Messina Denaro, magistrates believe.
Provenzano, who was known as the tractor because he mowed down his enemies as a young hit man, took on legendary status because he managed to elude police for 43 years.
In the 18 months since Provenzano's arrest there have been four Mafia killings that investigators say may have been part of a battle between Lo Piccolo and Denaro for leadership of the crime group.