Mexican drug lord Rafael Caro Quintero, who is on the US most wanted list, has been arrested in the western Sinaloa state, the Mexican Navy says, BBC reported.
Quintero, who is accused of kidnapping, torturing and murdering a US drug enforcement agent in 1985, was held in the town of Choix.
The Navy said Quintero, believed to be 69, was found in bushes by a specially-trained dog called Max.
The US said it would seek Quintero's immediate extradition.
Quintero was one of three founding members of the powerful Guadalajara Cartel.
He spent 28 years in jail for the murder of former US Drug Enforcement Administration (DEA) agent Enrique Camarena.
The murder strained US-Mexico ties at the time and was later dramatized in the Netflix series Narcos: Mexico.
In 2013, a court in Mexico cut short Quintero's 40-year sentence and freed him, ruling that he should have been tried in a state rather than a federal court.
The ruling was later overturned by the country's supreme court—but Quintero had already gone into hiding.
US officials said he quickly returned to drug trafficking, and Washington subsequently offered $20m for any information leading to his capture.