Serbian President Boris Tadic confirmed the arrest of the former Bosnian Serb army chief at a news conference.
Gen Mladic is accused of a key role in the massacre of at least 7,500 men and boys at Srebrenica in 1995.
He was the most prominent Bosnian war crimes suspect at large since the arrest of Radovan Karadzic in 2008.
President Tadic said work was under way to extradite Gen Mladic to the international war crimes tribunal in The Hague.
The detention, he said, had closed one chapter in Serbian history, bringing the country and the region closer to reconciliation.
It had also opened the doors to membership of the European Union, he added.
Nato chief Anders Fogh Rasmussen hailed the arrest, saying it finally offered "a chance for justice to be done".
Assumed nameGen Mladic was said by Serbian media to have been arrested in Vojvodina, a northern province of Serbia, in the early hours of Thursday morning.
President Tadic would only confirm he had been arrested "on Serbian soil".
He was reportedly using the assumed name Milorad Komodic.
The Serbian president promised that details of the arrest would be released once an investigation had been completed.
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