Mexico’s Attorney General’s Office said Javier Duarte was arrested in Panajachel, a picturesque tourist town on Lake Atitlan in the Guatemalan highlands, with the co-operation of the local police and Interpol.
The 43-year-old was located in a hotel where he was staying with his wife. He voluntarily agreed to leave his room when police arrived and was arrested without incident in the lobby
He looked pale and visibly tired when he was brought to a prison at a military base in the capital Guatemala City on Sunday where he is under heavy guard ahead of an extradition hearing.
His half a year as a fugitive has made him a high-profile symbol of government corruption in Mexico after he was accused of having links to a series of phantom businesses which allegedly won state contracts worth millions of pesos.
Duarte has denied stealing any money from the state and of diverting government funds overseas.
He said: “I don’t have foreign accounts. I don’t have properties anywhere”.
Despite this the Mexican government has allegedly found millions of dollars linked to the politician – frozen from more than 100 bank accounts and has also seized property and businesses tied to him.
A reward of 15 million pesos (£637,110) was offered for his capture.
Duarte was governor from 2010 until he resigned to fight the charges in October 2016 and disappeared a few days later. His temporary successor, Flavino Rios Alvarado, was arrested on suspicion of helping him flee last month.
The governor’s tenure was marked by allegations of corruption from the very beginning along with allegations that he has attempted to silence his critics.
During his tenure Veracruz was dubbed one of the most deadly places to be a journalist in Latin America after 17 reporters were murdered.
The detention comes a week after Tomas Yarrington, the former governor of Mexico's Tamaulipas state, was arrested in Italy, also on allegations of organised crime and money laundering.
Another ex-governor, Cesar Duarte of Chihuahua state, is also wanted on suspicion of corruption and is said to have fled to El Paso, Texas. He is not related to Javier Duarte.
All three ex-governors were members of the ruling Institutional Revolution Party, or PRI, of President Enrique Pena Nieto.
The high-profile cases have caused a major embarrassment for the unpopular central government which has vowed to clamp down on corruption.
The party, which expelled Duarte when he first disappeared in October, has sought to distance itself from him and applauded the arrest.
Duarte became a powerful symbol of alleged corruption during midterm elections last year in which the PRI lost several governorships, including Veracruz, that it had held uninterrupted since its founding in 1929.
Additional reporting by agencies