Bartolomeo Gagliano went on a murder spree in the 1980s, killing two prostitutes and a transvestite and seriously injuring another sex worker, for which he served years in a criminal psychiatric ward.
At the time of his escape on Wednesday, he had been serving time in prison in the northwestern Italian town of Genoa for a hold-up.
French police said he was detained on Friday afternoon in the southeastern French city of Menton after Italian authorities launched a manhunt for a man they described as "very dangerous" and "possibly armed".
Gagliano was spotted in Ventimiglia, an Italian border town, and fled on the motorway to France in a stolen vehicle.
Police found the parked car in Menton, and detained him as he was heading back to the vehicle.
Gagliano escaped while on temporary leave from prison to visit his mother – leave he had been granted for good behaviour.
Italian media gave him the nickname of "Valentine's Day monster" because he killed the transvestite on the day that celebrates love.
According to Italy's ANSA news agency, Gagliano had also been convicted for robbery, drugs and weapons possession, aggression and extortion.
He had already escaped from a psychiatric hospital in northern Italy in 1990, and a month later shot his girlfriend in the chin and fled the scene, the agency said.
She was found lying nude on a bed, with underwear at her neck to try to stop the bleeding, surrounded by pornographic material, it added. Gagliano later returned to the hospital.