The Epping man, 25, was arrested in Bundoora in Melbourne's north just after 3pm on Tuesday.
Victoria Police said he was believed to be responsible for "commissioning" arson attacks on Melbourne businesses from October to December in 2023.
They include fires at a smash repair business in Williamstown, a Glenroy tobacco store, two blazes at a Docklands restaurant, another at a different Docklands restaurant, and a fire at a Tullamarine reception centre.
The man will also be interviewed over threats against a tobacco shop owner in Glenroy in September, police said.
There are 31 active arson investigations in Victoria over fires at tobacco shops, gyms, private homes, restaurants and cars.
"Investigators believe the current situation is as a result of criminal syndicates in conflict due to competition for profit derived from the illicit tobacco market," Victoria Police said in a statement on Tuesday.
"The current conflict includes both the physical placement of illicit tobacco into stores, as well as demands for stores to sell the syndicate's illicit product and to pay a 'tax' per week to operate."
The force said the syndicates were believed to involve people from Middle Eastern organised crime groups and outlaw motorcycle gangs who used young people, street gangs and other low-level criminals to carry out attacks.
Detective Inspector Graham Banks said the arrest on Tuesday was significant.
"It's not just about arresting those who are being tasked to light fires - it's crucial we make inroads into those higher up in the syndicates who are actively directing this criminality," he said.
"By targeting those people we hope to cause as much disruption to these organised crime syndicates as possible and prevent further fires from occurring."
It comes as police probe whether an attempted arson attack on another tobacco store in Melbourne's west on Tuesday was connected to other firebombings.
A driver tried to plough through the shop's roller doors and then set their car alight on Major Road at Fawkner, Victoria Police said.
Nobody was inside the shop and the driver ran off.
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