Ratko Mladic, wanted by UN prosecutors for genocide during the Bosnian war in the 1990s, has been arrested in Serbia and is being flown to The Hague.
Serbian President Boris Tadic confirmed the arrest of the former Bosnian Serb army chief at a news conference.
Gen Mladic is accused over the massacre of at least 7,500 Bosnian Muslim men and boys at Srebrenica in 1995.
He was the most prominent Bosnian war crimes suspect at large since the arrest of Radovan Karadzic in 2008.
President Tadic said work was under way to extradite Gen Mladic to the international war crimes tribunal in The Hague, and it later emerged that that a plane carrying the suspect had taken off from Belgrade for the Dutch city.
The detention, the Serbian leader said, had closed one chapter in Serbian history, bringing the country and the region closer to reconciliation.
It had also opened the doors to membership of the European Union, he added.
A spokeswoman for families of Srebrenica victims, Hajra Catic, told AFP news agency: "After 16 years of waiting, for us, the victims' families, this is a relief."
UN war crimes chief prosecutor Serge Brammertz welcomed the arrest, saying: "Today's events show that people responsible for grave violations of international humanitarian law can no longer count on impunity."
In other reaction:
- US deputy national security adviser Ben Rhodes said the US was "delighted"
- UK Defence Secretary Liam Fox said it was a chance for Serbians to "close a very unhappy chapter in their history"
- Nato chief Anders Fogh Rasmussen said the arrest finally offered "a chance for justice to be done"
- Swedish Foreign Minister Carl Bildt said Serbia's EU prospects were "now brighter than ever"
Gen Mladic was said by Serbian media to have been arrested in Vojvodina, a northern province of Serbia, in the early hours of Thursday.
President Tadic would only confirm he had been arrested "on Serbian soil", adding that details of the arrest would be released once an investigation had been completed.
Gen Mladic had reportedly been using the assumed name Milorad Komodic.
Serbian security sources told AFP that three special units had descended on a house in the village of Lazarevo, about 80km (50 miles) north of Belgrade.
The house was owned by a relative of Gen Mladic and had been under surveillance for the past two weeks, one of the sources added.
Gen Mladic was indicted by the UN war crimes tribunal in The Hague in 1995 for genocide over the killings that July at Srebrenica - the worst single atrocity in Europe since World War II - and other crimes.
Having lived freely in the Serbian capital, Belgrade, he disappeared after the arrest of former Yugoslav President Slobodan Milosevic in 2001.
Speculation mounted that Gen Mladic would eventually be arrested when Mr Karadzic was captured in Belgrade in July 2008.
Larry Hollingworth, a logistics officer with the UN refugee agency who regularly met Gen Mladic during the Bosnian war, said he was "absolutely delighted" by news of the arrest.
"He was a very, very imposing figure and managed to frighten a lot of people - certainly those who worked for him," he told BBC Radio 4.
Just before news of Thursday's arrest, Mr Brammertz had accused Serbia of failing to do enough to find Gen Mladic.
"Until now efforts by Serbia to detain fugitives have not been sufficient," he said in a report sent to the UN Security Council.
President Tadic rejected criticism that Serbia had only taken action following international pressure.
"It is crystal clear that we did not calculate when we had to arrest Ratko Mladic," he told the news conference on Thursday.
"We have been co-operating with the Hague Tribunal fully from the beginning of the mandate of this government."
Speaking after the arrest, Mr Brammertz said UN prosecutors recognised the work done by the Serbian authorities and thanked them for "meeting their obligations towards the tribunal and towards justice".
"With the news of the arrest, we think first and foremost of the victims of the crimes committed during the conflicts in the former Yugoslavia," he added.
"These victims have endured unimaginable horrors - including the genocide in Srebrenica - and redress for their suffering is long overdue," the war crimes prosecutor said.