Vojkan Djurkovic, 58, is wanted by the Bosnian war crimes court for crimes he allegedly committed while serving as a member of a Serb paramilitary unit known as the Tigers in the northeast of the former Yugoslav republic.
He is accused of having participated in "ethnic cleansing" operations to remove the Muslim population from the village of Bijeljina, said a police officer who requested anonymity.
More than 200,000 people were killed in the Bosnian conflict which saw some of the worst atrocities in Europe since the second world war.
The two most wanted Bosnian war crimes suspects still at large in the Balkans are former Bosnian Serb leader Radovan Karadzic and his military chief Ratko Mladic.
Both have been charged with genocide and other crimes by the UN war crimes tribunal based at The Hague.