The 25-year-old from Epping was arrested in Bundoora in Melbourne's north just after 3pm on Tuesday.
Detective Inspector Graham Banks told reporters it's alleged the man was a "ring leader" who acted for a Middle Eastern crime gang.
Investigators claim he is in contact with the unnamed head of the syndicate based overseas and had been co-ordinating the fires.
The man is being interviewed over several 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, a Tullamarine reception centre, two blazes at a Docklands restaurant and another at a different Docklands restaurant.
No charges had been laid by Tuesday evening.
A restaurant at Docklands was the target of an arson attack on November 20. (Joel Carrett/AAP PHOTOS)
There are 31 active arson investigations in Victoria over fires at tobacco shops, gyms, private homes, restaurants and cars.
Victoria Police have said Middle Eastern organised crime groups and outlaw motorcycle gangs are believed to be in competition for profits from illicit tobacco and use low-level criminals to carry out attacks.
Insp Banks said the arrest on Tuesday was significant as it would disrupt the group allegedly responsible for much of the harm caused during the attacks.
"This particular syndicate is a world-wide network which relates to a massive market worth millions and millions of dollars," he said.
"There nothing that would stop this person from continuing to try and control that market but certainly what it will do (is) it will disrupt his particular business for sometime."
He said it was "just chance" no one had died in the arson attacks as many occurred at night when people were sleeping nearby.
Detective Graham Banks says it luck that no one had been killed in Melbourne's firebombing spree. (James Ross/AAP PHOTOS)
The Tullamarine reception centre is not connected to the conflict and the attack there only to happened to cause annoyance to an opposing group who had booked the venue, Insp Banks added.
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 the car alight on Major Road at Fawkner, police said.
Nobody was inside the shop and the driver ran off.
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