Daniel Bonventre, 63, was arrested at his Manhattan home, said FBI spokesman James Margolin. Bonventre was expected to appear in federal court later in the day.
Prosecutors said that, with Bonventre's knowledge, hundreds of millions of dollars were siphoned out of accounts belonging to Madoff's clients and used to support other aspects of his business. In some cases, Madoff's company used client money as collateral to obtain loans.
Prosecutors also accused him of failing to report hundreds of thousands of dollars in income to the IRS.
The name of Bonventre's attorney was not immediately on record.
Madoff, 71, is serving a 150-year prison sentence after admitting that he operated a giant Ponzi scheme for at least two decades, cheating thousands of individuals, charities, celebrities and institutional investors out of billions of dollars.