Officials said on Wednesday that Marco Mancini, a director of a division of the Sismi military intelligence agency, was arrested on charges of collaborating in the alleged abduction of Hassan Mustafa Osama Nasr, also known as Abu Omar, in 2003.
Abu Omar had claimed that he had been flown to Egypt and tortured.
It is the first time that an Italian official has been linked to the kidnap plot.
His arrest was first leaked by judicial sources and later confirmed in a statement by Francesco Cossiga, the former Italian president.
An Italian court has issued European arrest warrants for 22 suspected US agents over the abduction, but no Italians had been sought until now.
If an Italian role were confirmed, it would lend evidence to allegations that European countries colluded with the United States in the secret "renditions" of terrorism suspects.
Italian investigators had been wiretapping Nasr before his abduction and accuse him of having ties to al-Qaeda and recruiting combatants for Iraq, according to court documents.
They say the kidnapping broke Italian law and ruined a promising investigation.
Cossiga, who is also a former interior minister with close contacts in the secret services, said in a statement that other Sismi officials were also being arrested.
An investigative source said the operation was still in progress.
The chief prosecutor in the case, Armando Spataro, declined to comment.
The Abu Omar case is one of the best-known examples of alleged CIA secret operations in its war on terror, including the practice of "extraordinary renditions".
Human rights groups condemn the practice, saying suspects have frequently been sent by the United States to countries that use torture.
Washington acknowledges making secret transfers of terrorism suspects between countries, but denies either using torture itself against terrorist suspects or handing them over to countries that do so.