Ernesto Fazzalari, 46, was captured in the early hours of the morning in an appartment in a remote part of the southern region of Calabria, home to the notorious 'Ndrangheta organised crime syndicate.
Fazzalari was the second most-wanted 'Ndrangheta fugitive after "superboss" Matteo Messina Denaro.
On the run since 1996, he was convicted in absentia in 1999 of mafia association, kidnapping, illegal possession of weapons and a double homicide linked to a bloody 1989-91 feud which left 32 people dead in his home town of Taurianova.
"Thank you to the judges and the forces of order. Viva l'Italia," Prime Minister Matteo Renzi wrote in a tweet.
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He added: "This shows that you cannot run from justice. These are the kind of victories that encourage and support us in the difficult but winnable fight against organised crime."
Notoriously ruthless, the 'Ndrangheta has surpassed Sicily's Cosa Nostra and the Naples-based Camorra thanks to the wealth it has amassed as the principal importer and wholesaler of cocaine produced in Latin America and smuggled into Europe via north Africa and southern Italy.
The organisation is made up of numerous village and family-based clans based in Calabria, the rural, mountainous and under-developed "toe" of Italy's boot.
The name 'Ndrangheta comes from the Greek for courage or loyalty and the organisation's secretive culture and brutal enforcement of codes of silence have made it very difficult to penetrate.
A series of arrests in late 2014 and early 2015 confirmed that the organisation had expanded its Italian operations outside Calabria by buying up dozens of legitimate business across the wealthier north of the country, largely to launder cocaine profits.
There are dozens of 'NDrangheta fugitives still at large despite regular arrests in Italy and around the world.