Police seized three pistols, a stolen car with false plates and bomb making equipment and manuals during the raid in Montauriol.
Guy Hedgecoe, the editor of the English edition of the Spanish newspaper, El Pais, told Al Jazeera that Martitegi is seen as "probably the most senior member of Eta".
"At the moment it seems Eta really is in trouble. Most of its top leaders seem to be being pursued, infiltrated and arrested by authorities due in great part to the co-operation between the French and Spanish authorities," he said.
Martitegi has been on the run since July, when Spanish police broke up Eta's main attack unit, known as the "Vizcaya cell".
The cell has been blamed for a string of bomb attacks on police stations and government buildings.
'Path to prison'
Spain's ruling Socialist Party welcomed the arrests in a statement on Saturday.
The party praised French and Spanish security forces "for their constant and intense work to end terrorism inside and outside our borders".
"Terrorists must know that the only path they can take with these actions is one that leads to prison," the statement said.
Eta has been blamed for the deaths of 825 people in its four-decade campaign for an independent Basque homeland in northern Spain and part of southwestern France.
The group called off a truce with the Spanish government in June 2007, saying it had grown frustrated with the lack of concessions on the part of the administration of Jose Luis Rodriguez Zapatero, Spain's prime minister.
In December last year, French police arrested Aitzol Iriondo, the previous military leader of the group, also known as Balak.