David Rennie, 51, was taken into custody after he turned himself in, the Toronto Star reported. The former executive director of the charity's Toronto operations faces charges of theft over $5,000, possession of property and criminal breach of trust.
He was released pending a Jan. 4 court hearing, the newspaper said.
"We're alleging the thefts took place under David Rennie's control and without the permission of the Salvation Army," police Detective Sgt. Jim Gotell said at a news conference. "We're alleging that the toys were going to be redirected to other parties and sold for profit."
The newspaper said investigators were looking for an unidentified second person of interest connected to Northern Sales Group, a company with a warehouse that authorities suspect was involved in the redistribution scheme.
The thefts took place over two years. Police were alerted Nov. 6 after the missing items were detected in an internal audit by the Salvation Army, Gotell said.
Rennie had been on paid leave after an employee blew the whistle on the theft in August and was fired last week, the Star said.
Police found much of the stolen goods during a raid on a warehouse in Brampton Friday and at a second warehouse in North York Saturday.
Police also executed search warrants at two residences in Toronto and Durham Region where documents were seized, the newspaper said.