Santo Vottari, 45, was captured in a tiny hideout in a flat at Benestare, near the southern Italian city of Reggio-Calabria.
The Calabria region is home to the 'Ndrangheta organized crime syndicate, now considered Italy's most powerful mafia group.
Vottari was convicted in absentia in 2009 of being one of the heads of an 'Ndrangheta clan whose feud with local rivals culminated in the Duisburg killings.
He was given a prison term of ten years and eight months, two years after he went on the run.
Interior Minister Marco Minniti praised the police team that tracked him down to a building which had no fewer than four concealed bunkers in it. Inside the fourth one they searched, on the top floor of the building, they found a trapdoor leading to another bolthole, where they found Vottari squashed into a space just big enough to hold someone hiding out for a few hours.
"I'd like to congratulate the police... for bringing one of Italy's most wanted and dangerous men to justice," Minniti said.
Vottari was one of 31 people sentenced to prison terms in 2009 in connection with the Duisburg killings, which happened after a vendetta between two clans based in the same village, San Luca, spiralled out of control.
The feud between the Nirta-Strangio and Pelle-Vottari clans reportedly began with an egg-throwing prank in 1991.
Reprisals escalated after the killing, on Christmas Day, 2006, of Maria Strangio, the wife of clan leader Giovanni Nirta.
The feud was blamed for at least 16 deaths in total, with the killings in Germany bringing it to international attention.
Giovanni Strangio was convicted in 2011 of being the mastermind and one of the authors of the Duisburg killings. He was sentenced to life in prison. Seven others were given life sentences linked to the feud at the same trial.
Notoriously ruthless, the 'Ndrangheta has surpassed Sicily's Cosa Nostra and the Naples-based Camorra in influence thanks to its control of Europe's cocaine trade.
The organization is made up of numerous village and family-based clans based in the rural, mountainous and under-developed "toe" of Italy's boot.
The name 'Ndrangheta comes from the Greek for courage or loyalty and the organization's secretive culture and brutal enforcement of codes of silence have made it very difficult to penetrate.
But authorities claimed a major breakthrough last year when they captured Ernesto Fazzalari, whom they described as the last senior 'Ndrangheta fugitive still at large.
By Angus MacKinnon