Ricardo Taddei, who was arrested on Thursday on an Argentine warrant, will appear at Spain's High Court and could be extradited to face charges in his home country.
He is accused of kidnappings and torture at Argentina's clandestine detention centres during the 1976-83 military dictatorship.
An Argentine government report estimated that about 11,000 people either died or disappeared during a crackdown by the military to wipe out suspected dissidents during the dictatorship, although human rights groups say the number is closer to 30,000.
A statement from the Spanish police said Taddei specialised in fighting subversives and extreme leftists, and after being promoted to chief inspector of police joined the army as a colonel in 1979.
He had been in Spain with his wife and son since 1985.
Spain's High Court has been active in bringing to justice Argentine war criminals, and last year sentenced former navy captain Adolfo Scilingo to 650 years in prison for 30 deaths, as well as torture and illegal detentions during the dirty war.