Obasanjo was among the five armed robbery suspects who the police said had been terrorizing Osiele area of Abeokuta, the Ogun State capital.
The were reportedly arrested in the early hours of Friday by operatives of the Special Anti-Robbery Squad (SARS).
One Okikiola Adesina, who was named as the herbalist of the armed robbery gang had also been arrested.
A statement by Ogun police spokesperson, Abimbola Oyeyemi, identified other suspects as, Dayo Ajala, 39 (a.k.a Otege); Joseph Sunday, 24 (a.k.a J.J) and Chuckwuemeka Paul, 27 (a.k.a Ejima).
Oyeyemi said they were all arrested following information received by the SARS operatives about their hideout at Odeda area of the state.
According to him, the O/C SARS, CSP Tijani Muhammed had led his men to the area and cordoned off the hideout.
At the end of the operation, Ireportnews learnt that Obasanjo and his gang were nabbed.
The four suspects were said to have aided the arrest of their herbalist, who they claimed is their godfather that used to fortify them spiritually whenever they are going out for robbery operations; while also initiating new members into their fold.
The Police disclosed that one double-barreled locally-made short gun, one battle axe, two knives and assorted dangerous charms were recovered from the suspects
Meanwhile, the Ogun State Commissioner of Police, Edward Ajogun, has reportedly ordered full scale investigation into the activities of the suspects.