Eduardo Arellano Felix was arrested after a shootout in the Mexican city of Tijuana, on the US border, according to the Mexican defence department.
He is accused of trafficking hundreds of tonnes of cocaine and marijuana to the US.
The US state department has been offering $5m (£3m) for his capture.
Mr Arellano Felix and his sister, Enedina Arellano Felix, took over the leadership of the cartel after several of their brothers were either arrested or killed, the Mexican authorities say.
Police arrested the suspect on Saturday evening after chasing his car to a home in a middle-class district of Tijuana.
A three-hour gun battle erupted involving more than 100 police and soldiers and the house was riddled with bullets, federal police were quoted by Reuters news agency as saying.
The suspect’s daughter, 11, was at home at the time but was not harmed.
Mexican Assistant Public Security Secretary Facundo Rosas said the detainee had been the last of the Arellano Felix brothers at large.
“The generation of brothers who formed this criminal organisation has been dissolved,” he added.
According to the Mexican official, Enedina’s son, Luis Fernando Sanchez Arellano, has taken over the cartel’s operations.
BBC News, 26 October 2008
