Sabauddin Ahmed was arrested in February with another militant who police say had scouted Mumbai targets a year before last month's attacks, they said.
Both men are Indians - a blow to officials who have blamed Pakistan-based militants entirely for the three-day siege, which left 171 people dead and paralysed large parts of India's financial capital.
Ahmed was based in Katmandu, Nepal where he took orders from handlers from the banned Pakistani militant group Lashkar-e-Taiba, said Amitabh Yash, director of the police department's Special Task Force in India's Uttar Pradesh state.
Ahmed was being held in Uttar Pradesh, but was being brought to Mumbai for questioning, said Rakesh Maria, the city's top police investigator.
Yash said Ahmed managed safe houses in Nepal, using that country to smuggle Pakistani Lashkar members into India.
'He was their main point man in Katmandu, a very trusted man by Lashkar,' Yash said.
Meanwhile, India has demanded that the UN Security Council declare a Pakistan-based Islamic charity a terrorist group, saying it was a front for Lashkar.
India's appeal, made late Tuesday, came as Pakistan acknowledged the arrests of two men reportedly wanted by India in connection with the attacks.
The United states also said it was sending a top diplomat to New Delhi to discuss fallout from the violence and Pakistan's response.
In a speech, E. Ahamed, India's junior foreign minister, called on the UN to ban the group Jemaat-ud-Dawa, calling it 'a terrorist outfit.'
India and the United States believe Jemaat-ud-Dawa is a front for Lashkar.
Jemaat-ud-Dawa - which sprang up after Pakistan banned Lashkar in 2002 following US pressure - runs a chain of schools and medical clinics throughout the country and has helped survivors of two deadly earthquakes in recent years. It denies any links to Lashkar.
'The organisers, financiers and logistical providers of these terrorist attacks have to be punished,' Mr Ahamed said. 'Those who give ideological and moral support to this evil phenomenon must also be brought to justice.'
He called on Pakistan to take 'urgent steps to stop their functioning'.
On Wednesday, Pakistan Prime Minister Yousuf Raza Gilani told reporters that two of the top Lashkar men reportedly wanted by India, Zaki-ur-Rehman Lakhvi and Zarar Shah, were in Pakistani custody and being investigated.
It was the first official confirmation by Pakistan that Lakhvi was under arrest. Officials have said Lakhvi was arrested Sunday in a raid on a militant camp close to the Indian border.
Also on Wednesday, a US official said Deputy Secretary of State John Negroponte was expected in New Delhi later this week, strengthening American involvement in the region in the wake of the attacks. The official spoke on condition of anonymity because of the sensitivity of the matter.
US Secretary of State Condoleezza Rice visited New Delhi and Islamabad last week.
The diplomatic maneuvering came a day after police released the names and photographs of the militants who staged the bloody three-day siege of Mumbai and said they uncovered new details about the gunmen - including hometowns in Pakistan.
The new information, if confirmed, would bolster India's claim that the attack was launched from Pakistan.
Mumbai's chief investigator, Maria, showed photographs of eight of the nine slain attackers - some from identity cards, but three were gruesome pictures of maimed faces. The body of the ninth was too badly burned, he said. The 10th gunman, Mohammed Ajmal Kasab, was captured alive.
Mr Maria said all 10 attackers were from Pakistan and between the ages of 20 and 28. He did not say how police knew their hometowns, although they have been interrogating the surviving gunman, Mohammed Ajmal Kasab.
In Mumbai, a prominent lawyers group said on Wednesday it recently passed a resolution ordering its member not to defend Kasab or any other suspects in the attacks.
Kasab 'is not the same as other criminals arrested,' said Rohini Wagh, president of the Mumbai Metropolitan Magistrate Court's Bar Association. 'His main aim was an attack on our city, our country.'
In Russia, meanwhile, the head of that country's federal anti-narcotics agency said India's most famous gangster, Dawood Ibrahim, had helped in the attack.
'The information that has been received indicates that the well-known drug trafficker Dawood Ibrahim provided his logistics network for the preparation and implementation of the attacks,' the government daily Rossiiskaya Gazeta quoted Viktor Ivanov as saying.
Ibrahim, who India says fled to Pakistan after staging a series of Mumbai bombings in 1993, has been accused by Indian police of involvement in the drug trade.
As is often the case when Russian law enforcement officials talk about terrorism, Ivanov gave no details and provided no actual evidence. -- AP