Detectives arrested a 29-year-old man in Kenthurst and a 24-year-old man in Castle Hill, both in northwest Sydney, on Wednesday morning.
The arrests came about 11 days after three men stormed Chris Baghsarian's home and bundled him into a car in the middle of the night.
Remains believed to be those of the 85-year-old grandfather were found on Sydney's northwest outskirts on Tuesday.
Vision of the arrest shows the younger man, shirtless and in knee-length Adidas shorts, being marched out to a police vehicle by two armed officers as a number of detectives look on.
Another image shows the older man slumped in the back of a police car wearing designer clothing, with his head pointed down and his stomach protruding from his shirt.
Both remain at a local police station where they were taken for questioning.
Police believe the intended target for the abduction was a relative of underworld-linked Sydney businessman Dimitri Stepanyan, who lived on the same street as Mr Baghsarian in North Ryde.
Flowers were laid at the front door and near the patio of the octogenarian's home on Wednesday morning.
His family, who described the harrowing ordeal of the kidnapping as a "nightmare", expressed relief the alleged offenders had been caught.
"We welcome the news of the recent arrests in relation to the kidnapping of our father and grandfather," they said in a brief statement.
They asked for privacy, as they come to grips with the death of their devoted father, brother, uncle and grandfather "who would never hurt a fly".
The recklessness the kidnappers showed in both taking the wrong man and targeting a family member has angered authorities.
Police repeatedly told the kidnappers they had the wrong person and publicly urged them to release the elderly man, who relied on daily medication.
Several of those public appeals occurred after the evening of February 14, when police believe his attackers disposed of his body at Pitt Town, a semi-rural area on Sydney's northern outskirts.
Detectives found the remains near a local golf club after members of the public reported seeing a vehicle linked to the investigation in the area a day after Mr Baghsarian disappeared.
Officers searched a vacant home in Dural on Thursday and Friday after identifying it as a makeshift stronghold for the kidnappers.
Detectives are yet to formally identify the body but suspect it is Mr Baghsarian because of the forensic links to the Dural site, which police previously searched.
Premier Chris Minns described the grandfather's ordeal as "a shocking violent crime" and said the criminals responsible would be met with a swift response.
"(They) will not get away with it," he said.
Asked recently about organised criminal groups targeting relatives of their rivals, a senior detective described the practice "ridiculously disgusting".
The remarks followed the shooting of former Canterbury and Wests Tigers winger Matt Utai outside his home in Greenacre, in southwest Sydney, as he was about to drive to work.
The 2004 NRL premiership star was caught in the crossfire of his son Iziah Utai's alleged criminal associations and escalating gang conflict, detectives believe.
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