Syed Zabiuddin, also known as Abu Jundal, was arrested by Delhi police when he arrived at Indira Gandhi Airport from Saudi Arabia last week.
Under interrogation Jundal admitted a role in the so-called 26/11 attack, saying he worked closely with terror mastermind Zakiur Rehman Lakhvi, a report by the Press Trust of India said, although the news agency didn't name the police sources.
The PTI report said during his interrogation, Jundal admitted he was present in the "control room" of the terrorist group Lashkar-e-Toiba -- known as LeT -- in Karachi, Pakistan, and was giving direction to the 10 terrorists who carried out the strike.
A report by the BBC confirmed that police had arrested a man called Abu Jundal but the broadcaster didn't say he had admitted to being involved in the 26/11 attacks.
Police described Jundal as a "handler" of the gunmen, the BBC said.
Nine of the 10 gunmen were killed by security forces in the terrorists' daring raid in central Mumbai that lasted 60 hours and also wounded around 240 people.
The gunfight with police and the military severely damaged several well-known buildings, including the main train station Chhatrapati Shivaji Terminus, the Taj Mahal Palace and Tower Hotel, Hotel Oberoi-Trident, Cama Hospital and the Chabad House, a Jewish prayer center and the Leopold Cafe, a favorite among foreigners.
The surviving gunman, Mohammad Ajmal Amir Qasab, 24, was convicted of murder and waging war on India in May 2010 and given a death sentence. No date has been set for his execution.
Jundal, a native of the Indian state of Maharashtra, stayed in Pakistan after the Mumbai attacks and then moved to Saudi Arabia where he worked as a teacher. He also spent some time in Bangladesh, the PTI report said.
Police are trying to match Jundal's voice samples with those security agencies intercepted during the attack.
India's main anti-terrorism agency the National Investigation Agency is expected to take custody of Jundal for further interrogation, the PTI report said.
Zakiur Rehman Lakhvi, 52 and with whom Jundal reportedly said he had worked closely, is a Muslim born in the Pakistani Punjab and is a founder and senior leader of LeT.
He was arrested by Pakistani security authorities in December 2008 and remains in custody charged with terrorist acts in the Mumbai attacks.