Antonio Pelle had been on the run for five years after escaping from hospital in 2011 and was on the Interior Ministry's list of most dangerous mafia fugitives.
He was found on Wednesday in a secret room between the bathroom and his son's bedroom at his home.
Pelle had been serving a 20-year-prison sentence for mafia association and arms and drug trafficking when he escaped from the hospital in Locri, a town in Reggio Calabria, where he had been receiving urgent medical treatment for anorexia, Gazzetta del Sud reported.
Fifty police searched the two-storey home, but police commander Francesco Ratta told Italian broadcasters ” it wasn't easy, it took a very attentive eye to discover his hiding place.”
A video distributed by police (below) shows Pelle peering out from behind a cupboard. He appears shocked by their discovery of his hideout, and after talking to police, he climbs down and does not attempt to resist arrest. The room contained a bed and some cash.
Pelle had first been arrested – in a different underground bunker – in 2008.
The 54-year-old fugitive is considered to be the head of the Pelle-Vottari clan, part of the 'Ndrangheta, the Calabrian mafia. A feud between the Pelle-Vottari clan and rival Nirta-Strangio clan put Italy's largest organized crime group in the global spotlight in 2007, when a feud left six dead in an Italian restaurant in Duisburg, a small town in western Germany. In total, the feud between the gangs has claimed at least 20 lives.
Hiding in plain sight
Domenico Mollica, another 'Ndrangheta boss, was found living in a hidden attic of his Rome home in January.
Other members of the southern Italian organized crime groups have been captured after letting their guard down on holiday; in August, one boss of a Camorra clan was caught unarmed while sunbathing on a beach near Rome.
The same month, police nabbed another wanted mafia boss on a family holiday in Benidorm. Officers gained access to the suite where Salvatore Mariano, a member of Naples' Camorra mafia, was staying with his wife and children, by posing as hotel staff bringing him room service.
In other cases meanwhile, police just had to follow their noses.
One suspected member of the Camorra, Pasquale Brunese, was tracked down in a Spanish pizzeria last November, where he had been working as a waiter. And in May of this year, pizza led police to a member of the 'Ndrangheta, Rocco Gasperoni, who had made a name for himself as a star pizza-chef in a Dutch seaside town during his 15 years on the run.