Javier Duarte had been staying at the four-star hotel under a false name for at least two days.
Duarte became a powerful symbol of alleged corruption during midterm elections past year in which the PRI lost several governorships, including Veracruz, that it had held uninterrupted since its founding in 1929. Both Mexico and the United States are expected to file extradition requests with the Italian authorities.
His detention comes a week after Tomas Yarrington, the ex-governor of Mexico's Tamaulipas state, was arrested in Italy, also on allegations of organized crime and money laundering.
On Monday, he was waiting in a Guatemalan military prison for his initial appearance before a judge scheduled for Wednesday and eventual extradition to Mexico.
All three ex-governors were members of the ruling Institutional Revolution Party, or PRI, of President Enrique Pena Nieto.
In mid-October 2016, Duarte resigned as governor amid allegations of corruption and disappeared. He has been accused of embezzlement and, according to the Mexican authorities, is thought to be hiding in the United States. Interpol also issued an worldwide arrest warrant against him. But instead, he vanished. Interpol joined the search and the Mexican government offered a reward of about $811,000 for his capture. During his term, Veracruz, an oil-rich area on the Gulf Coast, suffered spiraling violence and widespread disappearances as criminal organizations fought for turf.
The state of Veracruz also became Mexico's most risky region for journalists, with 17 killed during his time in office.
And that's not to mention the mass grave discovered outside Veracruz city last month that contained 252 bodies, many of which are believed to have been buried years ago.
Speaking past year after he was accused of having links to phantom businesses that had successfully bid for state contracts, Duarte denied the accusations against him. Observers say he has put on weight since fleeing Mexico. He is accused of running a corruption ring that allegedly pilfered millions of dollars from Veracruz's coffers, and stripped its schools and hospitals of their resources.
The public's tolerance of corruption, long part of the fabric of Mexican life, reached a tipping point in recent years, spurring a grass-roots anti-corruption movement that helped push the successful passage of new anticorruption legislation.
Duarte became a powerful symbol of alleged corruption during midterm elections past year in which the PRI lost several governorships, including Veracruz, that it had held uninterrupted since its founding in 1929.