The woman was arrested on Sunday evening, Police Inspector (Crime) of Vishnunagar police station in Dombivali, N D Patil, told PTI.
The arrested woman, identified as Rani Mutthu Mandal, had purchased fish from a local vendor and paid a note of Rs 1,000. Howerver, when the vendor Gurunath Patil later verified the currency note, it turned out to be fake, police said.
Patil lodged a complaint with police, who carried out a search at the woman's house and recovered 57 notes of Rs 1,000 denomination and 88 notes of Rs 500 with a collective face value of Rs 1,05,500 from her.