Karadzic, who led ethnic Serb forces during the war that erupted over Bosnia's secession from Yugoslavia, is accused of masterminding massacres that the United Nations war crimes tribunal described as "scenes from hell, written on the darkest pages of human history," the Associated Press reported.
The arrest of Karadzic and other indicted war criminals and their delivery to the Hague war crimes tribunal, is one of the main conditions of Serbian progress toward European Union membership, Reuters reported.
The EU welcomed the capture as a milestone in Serbia's aspirations to join the organization. A NATO spokesman described it as "good news for the international community," according to Reuters.
The U.N. war crimes tribunal in The Hague indicted Karadzic in July 1995 for genocide during the 1992-95 Bosnian war. He was indicted on charges of authorizing the shooting of civilians during the 43-month siege of Sarajevo.
He was indicted on genocide charges a second time four months later for orchestrating the slaughter of some 8,000 Muslim men after Bosnian Serb military commander Ratko Mladic's forces seized the U.N. "safe area" of Srebrenica in eastern Bosnia.
The West is also pressing for the arrest of Mladic, who is also in hiding.
Karadzic went underground in 1997, two years after NATO military intervention ended the war that followed from the collapse of Yugoslavia.
He has been in hiding since at least 1998 and topped the tribunal's most-wanted list for more than a decade.
Karadzic was said to have resorted to donning elaborate disguises to elude authorities. His reported hide-outs included Serbian Orthodox monasteries and refurbished mountain caves in remote eastern Bosnia. Some newspapers reported that he had disguised himself as a priest by shaving off his trademark silver mane and wearing a brown cassock.
As leader of Bosnia's Serbs, Karadzic hobnobbed with international negotiators and his interviews were top news items during the 3 1/2-year Bosnian war, which was triggered when a government dominated by Slavic Muslims and Croats declared independence from Yugoslavia in 1992.
But Karadzic's reputation changed by the time the war ended in late 1995 with an estimated 250,000 people dead and another 1.8 million driven from their homes. He was indicted twice by the U.N. tribunal on genocide charges stemming from his alleged crimes against Bosnia's Muslims and Croats.
The West had long suspected Belgrade of failing to press the search, but the new government had signaled it wanted to comply.
With NATO-led peacekeepers under orders to arrest him on sight, associates said he sometimes traveled in ambulances with flashing lights to zip through NATO checkpoints undetected to spend time with his family in the Bosnian town of Pale, the wartime Bosnian Serb capital.
But his wife surprised the public in July 2005 when she appealed to her husband to come out of hiding and surrender "for the sake of your family." Within a week, his son said publicly that he believed everyone responsible for war crimes must face justice, "even if it is my own father" Reuters reported.
Karadzic reportedly also visited his sick mother in the mountains of neighboring Montenegro, and in 2002 went to Budva on that former Yugoslav republic's Adriatic coast.
Sources close to the government told Reuters that Karadzic was arrested in Belgrade.
Karadzic was undergoing a formal identification process, including DNA tests, and would be meeting with investigators overnight. A war crimes prosecutor was due to visit Belgrade on Tuesday.