The 50-year-old former general was arrested at a hotel in the Canary Islands on Wednesday night and flown from Tenerife to a Spanish military base in southern Madrid.
He appeared in Spain's highest court on Thursday to be informed of the charges against him by the International Criminal Tribunal for the former Yugoslavia (ICTY).
The former French foreign legionnaire has been on the run since the ICTY indicted him for atrocities against ethnic Serbs by troops under his command during the 1991-1995 Serbo-Croatian war.
After the 10 minute hearing in the Spanish court, the judge ordered that Gotovina be kept in custody pending his transfer for trial to the international court in The Hague in the Netherlands.
Officials said Gotovina would be held at the Soto del Real prison, 37 kilometres north of Madrid, pending his transfer to The Hague in the next few days.
Capture welcomed
The capture of Gotovina is being seen as a breakthrough for the UN war crimes court, which is still bogged down with the trial of former Yugoslav president Slobodan Milosevic, now in its fourth year.
The court is under pressure from the UN, which wants to close the court by 2010 even though there are still over 50 suspects awaiting trial.
Of the 161 people indicted by the ICTY, six remain at large, including the two most-wanted fugitives Bosnian Serb leader Radovan Karadzic and his military commander Ratko Mladic.
After announcing the "very good news" of Gotovina's capture, chief war crimes prosecutor Carla Del Ponte stressed that she still expected the capture of Karadzic and Mladic.
But a Bosnian official has said the capture of Ante Gotovina was an embarrassment for Ms Del Ponte who accused the Catholic Church of sheltering him.
"Will Del Ponte be ashamed at all after her statements, which inflicted great damage on the Roman Catholic Church, that Gotovina was hiding in monasteries here and in Croatia," the chairman of Bosnia's tripartite presidency, Ivo Miro Jovic, told Bosnian Serb television.
In September, Ms Del Ponte expressed frustration over Croatia's apparent inability to track down the former general.
She told a British newspaper she suspected Gotovina was hiding in a Franciscan monastery in Croatia and that the Vatican knew his location.
Croatia's Catholic Church and the Vatican strenuously rejected the accusations.
Ms Del Ponte is due on December 15 to hand in a report on Serbia's cooperation with the court to the UN Security Council and a negative assessment could threaten its aspirations to join the EU.
Street protests
Several hundred people turned out on the streets of Croatia's capital on Thursday night to protest Ante Gotovina’s arrest.
A crowd gathered at Zagreb's main Ban Josip Jelacic square chanting "Ante, Ante!" and "(Prime Minister) Ivo Sanader betrayed you!"
The protesters then headed towards a nearby government building which was cordoned off by riot police, and demanded to be addressed by Prime Minister Sanader.
Scuffles broke out as police tried to push the crowd back.
Stones and bottles were thrown at the building, breaking some windows, while around five protestors were seen being detained. The crowd later dispersed.
"It is a huge injustice. Gotovina was betrayed by the Croatian authorities," Marin Zilic, a war veteran from Zagreb, told news agency AFP whist holding a large photograph of the former fugitive.
Some carried banners bearing slogans like "A hero, not a criminal!" while other wore T-shirts bearing Gotovina's photo or were wrapped in Croatian flags.
"If there was no Gotovina, there would be no Croatia. He won that most important battle for Croatia. We should never forget that," one protestor, Slaven Knezovic, said.
"It is shameful that the one who fought for Croatia's freedom is being hunted like a beast," the 64-year-old retired teacher added.
Gotovina led the 1995 military operation in which Croatia regained a key territory held by rebel Serbs in the south.
The operation -- dubbed Storm --practically ended the former Yugoslav republic's war of independence that claimed about 20,000 lives while the Serb rebels occupied one-third of its territory.
About 50 people also gathered in the southern Adriatic town of Dubrovnik to voice support to Gotovina, national television reported.