Suresh Kalmadi was removed from his post in January.
Police say he will be charged with conspiracy regarding the awarding of commercial contracts for the Games - he denies any wrongdoing.
The build-up to the Games was marred by allegations of sleaze and incompetence.
A spokesman for India's Central Bureau of Investigation (CBI) said Mr Kalmadi was arrested "for conspiracy to cause favour to a company in Switzerland while procuring timers and scoring equipment for the Games".
In February, organising committee Secretary General Lalit Bhanot and another top official, VK Verma, were arrested, accused of financial irregularities linked to the Games.
The row over corruption at the Games is one of a series of corruption scandals that has rocked India in recent months.
Mr Kalmadi is expected appear in court on Tuesday.
Source link: http://www.bbc.co.uk/news/world-south-asia-13186190
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