Rabbi Yona Metzger had been under investigation for several months, but a gag order on the case was not lifted until Monday, Haaretz reported.
Besides allegations of accepting bribes, he faces money laundering, obstructing an investigation and fraud charges.
Police accuse Metzger of accepting millions of dollars in cash and goods from the heads of non-profit organizations to advance their interests.
Authorities cited several reasons for arresting Metzger now. They said their investigation had finally revealed sufficient evidence to warrant his arrest. They also accused him of trying to get witnesses to lie and of obstructing their investigation.
Metzger has been the subject of police investigations for a decade. In 2003, two men accused him of harassing them. Authorities decided there were insufficient grounds to prosecute the rabbi after both he and the men passed polygraph tests.
In 2005, he was investigated on allegations he received thousands of dollars in benefits from Jerusalem hotels that provided accommodations for him and his family even though the state provided him a rent-free luxury apartment.
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