Working with the FBI and police in the Netherlands, New Zealand police arrested the 18-year-old in the North Island city of Hamilton, said Martin Kleintjes, head of the police electronic crime center. The suspect's name was not immediately available.
Kleintjes charged that the ring was responsible for stealing at least $20 million using bank account and login details detected by their illegal spyware.
The arrest was part of international probe intoin which hackers gain control of third-party computers through malicious software and then use them as remote-controlled robots to crash online systems, accept spam and steal users' personal information.
Eight people have been indicted, pleaded guilty or convicted since the investigation started in June. Thirteen additional warrants have been served in the U.S. and overseas in the investigation, which the FBI says has uncovered more than $20 million in economic losses.
New Zealand police searched the residence of the 18-year-old suspected to be the ringleader earlier this week. The federal agency identified the person by the online handle "AKILL."
Earlier this month, Ryan Goldstein, 21, of Ambler, Pa., was indicted in the case. Authorities allege that the New Zealand suspect and Goldstein were involved in crashing a University of Pennsylvania engineering school server Feb. 23, 2006.
Officials said that the server, which typically handles about 450 daily requests for Internet downloads, instead got 70,000 requests from the account of an unsuspecting Penn student over four days. Over time, the FBI followed an electronic trail from that student's account to Goldstein's screen name, "Digerati," and the New Zealand hacker.
The crash briefly shut down computers at Penn's School of Engineering and Applied Sciences, but did relatively little damage, university spokesman Ron Ozio said.
Goldstein has pleaded not guilty and was released on bail while awaiting a trial set for March 10.
He faces up to five years in prison and a $250,000 fine if convicted of the single count of conspiracy to commit computer fraud.
"We feel the charges are inflated," defense lawyer Ronald Levine said Thursday. "We think this is kind of an exaggerated case."
Goldstein did not return phone messages left by The Associated Press on his cell phone and his parents' home in Ambler. He remains enrolled at Penn, according to Ozio, who said he could not comment on possible disciplinary action.