Arumugam, the party's strongman in Salem district, was arrested around noon near his residence, police said.
The former agriculture minister would be taken to Salem for further questioning, they said.
On May 17, vigilance officials had conducted raids at 16 premises of Arumugam and his relatives in Chennai and Salem in connection with a disproportionate assets case.
Arumugam is the latest among several leaders and former ministers, besides MLAs to face police or DVAC action either on land grab charges or allegations of disproportionate assets, after the AIADMK government came to power in April last year.