Gadi Rambabu, deputy commander of Peddapalli Area Committee Manthani Dalam group, was arrested from the outskirts of Chinnaboyanpalli village in Eturunagaram area, Additional SP S Senthil Kumar said.
Rambabu, who was underground since 2004, was involved in five offences, including four murders, he said.
He was carrying an award of Rs 50,000 on his head and was also allegedly involved in the killing of AP Rayons Factory Deputy Manager Ramakrishna in May last year, police said.