Police in the northern state of Chihuahua detained Mario Nunez, 39, also known as "M-10", in the border city of Ciudad Juarez, federal security spokesman Eduardo Sanchez said.
Mr Nunez, a former police officer, began working with the Juarez Cartel before joining the rival Sinaloa organisation allegedly led by Mexico's most-wanted man, Joaquin Guzman.
The government partially blames Mr Nunez for an upsurge in drug violence that brought shoot-outs in broad daylight, ambushes of police and kidnappings to Ciudad Juarez, which is across from El Paso, Texas.
US court documents say Mr Guzman, known as "El Chapo", hired Mr Nunez and gave him the job of snatching the smuggling corridors into the US from the local Juarez Cartel, through ordering gangs of hitmen to carry out killings that included grisly mutilations and decapitations.
The Juarez Cartel lost ground to the Sinaloa organisation in a three-year battle that wound down in 2011, but Mr Nunez's criminal career continued, authorities say.
The Mexican government claims his power struggle with another drug chief in 2011 resulted in the murder of 350 people, whose bodies were unearthed in 23 mass graves in the northern state of Durango.