Salvatore Lo Piccolo was arrested along with his son, Sandro, and two other suspected organized crime figures during a police raid on a house near Palermo, ANSA reported Monday.
Authorities allege that Lo Piccolo and a younger Trapani rival have been struggling for the position at the head of Cosa Nostra since the previous leader, Bernardo Provenzano, was arrested 18 months ago.
"Salvatore Lo Piccolo was the only one able to take up Provenzano's mantle. He was the top man in Palermo and was scaling the peak of the organization," Italy's Anti-Mafia Prosecutor Piero Grasso, told ANSA.
"This exceptional result is a big step forward in our fight against Cosa Nostra."
Francesco Forgione, head of the anti-Mafia commission in the Italian parliament, said the arrests "mark an extraordinary day for Italian democracy and the anti-Mafia fight."