Mikel Irastorza was found in a home in the French town of Ascain, in the Pyrenees region bordering Spain, the interior ministry said in a statement.
The couple housing Irastorza were also taken into custody, French sources said.
The Spanish statement said the raid, led by French security forces working with Spanish civil guards, was aimed at the “leadership structure of ETA”.
Irastorza was described by the ministry as “currently the most senior leader of the terrorist group ETA still at large”.
The Spanish ministry said other arrests could follow.
ETA waged a violent campaign for decades for an independent Basque homeland in northern Spain and southwestern France, and is blamed for the deaths of more than 800 people.
It declared a ceasefire in October 2011 but has refused to give up its weapons, and is seeking to negotiate its dissolution in exchange for amnesty or improved prison conditions for the roughly 350 ETA members held in both countries.
Spain’s new Interior Minister Juan Ignacio Zoido, who was only appointed on Thursday, hailed the arrest.
“As long as the terrorist group fails to give up its weapons for good and refuses to dissolve itself, the Spanish government will continue to fight the scourge of terrorism,” Zoido told reporters.
On October 12 France and Spain announced a new discovery of an ETA weapons stockpile in Carlepont, 120 kilometres (75 miles) from Paris.
ETA’s influence has waned in the Basque region, its ranks thinned by arrests over the years on both sides of the border. Most ETA members are in prison and only about 20 are still at large, according to French and Spanish authorities.
Public support has dwindled, too, as many Basques view the armed campaign for an independent homeland as belonging to the past.