In a statement, police said Brian Charrington was taken into custody along with his son in the Mediterranean resort town of Alicante and that his girlfriend, who was not named, was arrested in Venezuela while organizing a cocaine shipment.
Thirteen people in all were arrested in the two countries, accused of smuggling drugs into Spain for sale across Europe.
"One of the arrested was Brian Colin Charrington, a long-time British criminal who is one of the top 10 most investigated criminals by European police forces," the Spanish police statement said.
It said Charrington, a former car dealer from Middlesbrough in northern England, had been living a life of luxury in Spain where he and his son owned ten homes, several top-end cars and six boats in the Marina Alta area of Alicante alone.
Andrew Moran, a Briton wanted on charges of aggravated robbery, was arrested in May while relaxing by the pool on one of Charrington's properties, the statement added.
Police said they had also seized 220 kg (485 pounds) of cocaine from an apartment and blocked bank accounts, property and goods worth over 5 million euros ($6.5 million).
Spain conducted the three-year-long investigation together with police in Venezuela, Colombia, Argentina and
Venezuelan Justice Minister Miguel Rodriguez Torres said the gang was thought to have smuggled "more or less" 25 tonnes of cocaine to Europe from South America over the last decade.
"We'll continue investigating and identifying the assets that these people have registered in different parts of the country," Torres said in a telephone call to Venezuela's state television.
Spain remains a popular destination for British fugitives who, until 1985, exploited the lack of an extradition treaty between the two countries.
Since 2007, 52 of 65 British fugitives known to be in Spain have been arrested as a result of campaigns organized by the Serious Organised Crime Agency (SOCA), charity Crimestoppers and the Spanish police, according to SOCA.
Among the high profile arrests, convicted British drug trafficker Mark Lilley was arrested in Malaga earlier this month in a panic room hidden behind a bedroom wardrobe.
Venezuela, meanwhile, shares a long, largely unpoliced border with Colombia and has become a major transshipment point for Colombian cocaine on its way to international markets.
The government in Caracas says its arrest of several high profile Colombian traffickers in recent years is evidence of its commitment in the fight against drug smuggling.
Last year, Venezuelan security forces working with Colombian officers and U.S. and British intelligence agencies caught one of the most-wanted Colombian kingpins - Daniel "Crazy" Barrera - during a raid in a Venezuelan border city.
The Colombian government said Barrera's group was capable of sending 10 tonnes of cocaine a month toMexico's Sinaloa cartel, the most powerful organized crime gang in the Americas.
(Additional reporting by Daniel Wallis in Caracas; Editing by Mark Heinrich and Paul Simao)