Fujimori, who led Peru from 1990 to 2000, has been a fugitive in his ancestral homeland Japan since he fled there in November 2000, when a corruption scandal toppled his government.
He flew from Japan to Chile on Sunday to try to relaunch his political career and run for president next year.
Peruvian Foreign Minister Oscar Maurtua said in Lima that Fujimori had been arrested by Chilean police and moved from his hotel.
Police picked up Fujimori at the Marriott Hotel in Santiago, and he put up no resistance, police sources said.
It was unknown where he had been taken.
"The Chilean courts have just issued an arrest warrant for Alberto Fujimori following a request by Peru... He's been arrested," Maurtua said in a late-night briefing.
Chilean police were not immediately available for comment.
"It is my aim to temporarily remain in Chile as part of my efforts to return to Peru and keep my promise to an important part of the Peruvian people who have called on me to be a candidate in the 2006 elections," Fujimori, 67, said in a
Fujimori's arrest coincides with a
tense period in Chile-Peru ties
statement released earlier in Peru and Chile.
Fujimori said in October that he would run for president despite being barred from political activity due to 21 criminal charges against him.
Peruvian President Alejandro Toledo called an emergency cabinet meeting to discuss the issue.
Peru was planning to file a suit at the International Court in The Hague this year to try to force Japan to send the former president to Peru for trial.
Japan had refused to extradite Fujimori, born in Peru to
Japanese immigrants, because he obtained citizenship after
moving there in 2000.