Ruben Guerrero was arrested Thursday on suspicion of making methamphetamine and narcotics sales, the Los Angeles Times reported. His bail was set at $60,000.
Guerrero's wife, Mayor Christina Cortez, told the Times she was disappointed and shocked.
"I would urge everyone and the public to let this investigation take its course," she said.
A Los Angeles County sheriff's investigation began more than a month ago after local police said they suspected Guerrero was selling methamphetamine.
Investigators said they spotted Guerrero selling drugs near the Montebello Intermediate School.
Guerrero allegedly used his home as a base of operations, the Times reported.
Search warrants were served at the family home and at the house of the mayor's 89-year-old grandmother.
Last year, authorities investigated a suspicious fire that burned Cortez's car.
The vehicle was mostly driven by Guerrero, Cortez told police at the time.
Montebello Councilman Frank Gomez sought a restraining order against Guerrero earlier this year.
Gomez said Guerrero had made threats against him, once through voice mail and once at a council meeting.
The restraining order was denied in January, the Times said.
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