He is also linked to the 2003 attack on the JW Marriott Hotel in Jakarta that killed 12, National Police spokesman Ahmad Ramadhan said.
Source: INDONESIAN POLICE
Zulkarnaen, a biologist who was among the first Indonesian militants to go to Afghanistan for training, is also accused of harbouring Upik Lawanga, another bomb maker and a key Jemaah Islamiyah' member.
Lawanga was arrested by counterterrorism police in Lampung last week.
He had eluded capture since 2005 after being named as a suspect in an attack that killed more than 20 people at a market in Poso, known as a hotbed of Islamic militancy on Indonesia's Sulawesi island.
"He is in custody and being questioned by investigators," Ramadhan said of Zulkarnaen, adding that police are still conducting an investigation at his house in Lampung.
Police said they were tipped off to Zulkarnaen's location in raids after interrogating several suspected militants arrested late last month.
Since May 2005, Zulkarnaen has been listed on an al-Qaeda sanctions list by the UN Security Council for being associated with Osama bin Laden or the Taliban.
The Security Council said Zulkarnaen was one of al-Qaeda's representatives in Southeast Asia and one of the few people in Indonesia who had had direct contact with bin Laden's network.
It said Zulkarnaen led a squad of fighters known as the Laskar Khos, or Special Force, whose members were recruited from among some 300 Indonesians who trained in Afghanistan and the Philippines.
He became operations chief for Jemaah Islamiyah after the arrest of his predecessor, Encep Nurjaman, also known as Hambali, in Thailand in 2003.
In the following decade, Indonesian security forces crushed the Jemaah Islamiyah network, supported by the US and Australia, killing leaders and bomb makers and arresting hundreds of militants.
But a new threat has emerged in the past several years from Islamic State group sympathisers, including Indonesians who travelled to the Middle East to fight with IS.