The owners of construction firms in Palazzo Adriano, a village of just over 2,000 people near Palermo, were forced to pay three percent of each new contract to the mafia, with the fee lowered to one percent for those in financial hardship, Il Sole 24 Ore reported.
The business owners were threatened with arson attacks or theft if they refused to pay the protection money, or "pizzo".
But instead of bowing down to the notorious criminal network, they reported the clan to the police, who made the arrests on Tuesday morning.
The local gang was allegedly led by Antonino Di Marco, a council worker who has links to the notorious mafia boss Salvatore "Totò" Riina.
While mafia clans in Sicily continue to use racketeering to control the local population, much of their profit comes from other activities such as money laundering and cocaine trafficking.