Fujimori was arrested at the Marriott Hotel in Santiago after arriving on Sunday afternoon on a surprise visit from Japan, saying he would return to Peru to launch a presidential campaign.
"He did not resist the arrest, on the contrary," said Marianela Gomez, the head of Interpol in Chile. "He is completely calm." It was unclear where he was being held.
Fujimori, who led Peru from 1990 to 2000, has been a fugitive in his ancestral homeland Japan since he fled there in November 2000, when a corruption scandal toppled his government.
Peruvian Foreign Minister Oscar Maurtua had told reporters in Lima late on Sunday that Fujimori had been arrested by Chilean police and moved from his hotel.
There are international arrest warrants outstanding for Fujimori. Chilean courts processed a local arrest warrant on Sunday, enabling police to take him into custody.
"It is my aim to temporarily remain in Chile as part of my efforts to return to Peru and keep my promise to an important part of the Peruvian people who have called on me to be a candidate in the 2006 elections," Fujimori, 67, said in a statement released on Sunday in Peru and Chile.
Fujimori said in October he would run for president despite being barred from political activity due to 21 criminal charges against him. These included corruption and political responsibility for the death squad murders of 25 people, including a child, in the early 1990s.
Fujimori arrived in Chile at a time of tense relations between Chile and Peru, after Peru's Congress passed a law last week in an attempt to reclaim sea territory from Chile.
Peru was planning to launch a suit at the International Court in The Hague this year to try to force Japan to send the former president to Peru for trial.
Japan had refused to extradite Fujimori, born in Peru to Japanese immigrants, because he obtained citizenship after moving there in 2000.
"Our understanding is that he left for personal reasons. Since this is an issue related to his privacy, the Japanese government would like to refrain from commenting," Akira Chiba, a Foreign Ministry spokesman, said in Tokyo.
A source in Tokyo close to Fujimori told Reuters he was not aware of any pressure by the Japanese government on Fujimori to leave the country.