France arrested Rwandan genocide suspect Felicien Kabuga on May 16 near Paris, who has been on the run for 25 years.
Rwanda's most-wanted man Kabuga is accused of playing a leading role in one of the worst massacres of the 20th century.
The 84-year-old had a $5m bounty on his head, was living under a false identity in a flat in Asnieres-Sur-Seine, according to the French justice ministry.
French gendarmes arrested him at 05:30 GMT on Saturday. Kabuga had been hiding with the complicity of his children. A police statement described him as "one of the world's most wanted fugitives".
A Hutu businessman, Kabuga is accused of funding militias that massacred about 800,000 ethnic Tutsis and moderate Hutus over 100 days in 1994.
"Since 1994, Felicien Kabuga, known to have been the financier of Rwanda genocide, had with impunity stayed in Germany, Belgium, Congo-Kinshasa, Kenya, or Switzerland," a justice ministry statement said.
The arrest paves the way for bringing the fugitive in front of the Paris appeal court and later to the International Court of Justice in The Hague.
Lewis Mudge from New York-based Human Rights Watch said "it is a huge day for Rwanda".
"Felicien Kabuga is one of the big fish. He is one of the last remaining individuals still out there who is alleged to have had a planning purpose with regards to the Rwanda genocide," Mudge told Al Jazeera.
Kabuga was indicted on genocide charges by the International Criminal Tribunal for Rwanda.
Rwandan prosecutors have said financial documents found in the capital, Kigali, after the genocide indicated that Kabuga used his companies to import vast quantities of machetes that were used to slaughter people.
The wealthy businessman also was accused of establishing the station Radio Television Mille Collines that broadcast vicious propaganda against the ethnic Tutsi, as well as training and equipping the Interahamwe militia that led the killing spree.
Kabuga was close to former President Juvenal Habyarimana, whose death when his plane was shot down over Kigali sparked the 100-day genocide. Kabuga's daughter married Habyarimana's son.
Kabuga is expected to be transferred to the custody of the UN mechanism, where he will stand trial.