The man, arrested two days ago in Baghdad, was identified in a government statement on Tuesday as Sami Ammar Hamid Mahmud, also known as Abu Aqil. It did not give his nationality but said he had been active outside Iraq.
"The aforementioned was responsible for managing and leading operations outside Iraq and was able to recruit Abu Salwa as emir (chief) of the al-Qaida network in Baghdad," the statement said.
"Abu Aqil's cell was responsible for kidnapping Iraqis and foreign nationals to extract ransoms that would fund terror acts in Iraq."
Iraq's President Jalal Talabani has meanwhile denied any Iraqi government involvement in talks the United States is having with anti-US fighters in the country.
Talabani denied any involvement
in the US talks with Iraq fighters
"The Iraqi government has nothing to do with the negotiations with insurgents," Talabani told a news conference on Tuesday. "If the Americans are negotiating with them, it's up to them."
US Defence Secretary Donald Rumsfeld confirmed on Sunday that US officials had held talks with Iraqi fighters but insisted Washington's role was limited to that of broker for the Iraqi government.
"The Iraqis have a sovereign government," Rumsfeld said. "They will decide what their relationships with various elements of insurgents will be. We facilitate those from time to time."