The accused, identified as Anil Ramsagar Choube, a resident of Ourav village, was working as a bodyguard of the deceased Balaram Mhatre at Diva in Thane district, crime branch senior inspector Nitin Thackeray told reporters.
Mhatre was gunned down on March 16, 1990 allegedly by Choube and others when he was asleep, said DCP (Crime) Parag Manere.
He said Choube was a history sheeter and had also been associated with a political party in his native state.
"Pintya was later gunned down at Retibunder in Mumbra by one Mohamamd Kalya, a sharp shooter working for Dawood Ibrahim, at the behest of Mhatre," the DCP said.
Police are trying to find out who gave Choube the contract to kill Mhatre.
Three teams of local police have already fanned out to Bihar and Uttar Pradesh to trace other accused who have been identified.
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