A team of police and prosecutors had sought arrest warrants for Lee Joon-Seok, 52, and two of his crew without specifying charges, the coastguard had said, after the incident that left 28 people confirmed dead and another 268 still missing.
The Yonhap news agency reported that Lee was in custody and faced five charges, including negligence of duty and violation of maritime law. Yonhap said a local court in Mokpo had issued arrest warrants for him and two other crew members, citing the possibility that they may flee or destroy evidence.
Earlier, prosecutors said Lee had handed the helm to his third officer before the ferry capsized. Three days after the sinking, relatives were clinging to increasingly slim hopes that some may have survived in air pockets.
The unfolding tragedy was compounded by the apparent suicide of a high school vice principal who had been rescued from the 6,825-tonne Sewol that sank on Wednesday morning with hundreds of his students trapped inside.
The breakthrough by dive teams in finally accessing the ship came more than 48 hours after the 6,825-tonne Sewol went down -- a delay that has incensed the relatives of those still unaccounted for.
After several attempts, two divers managed to pry open a door and enter the cargo section on Friday afternoon, a senior coastguard official said. Hours later another two-man team accessed one of the cabins, but found nothing. "The search operation will continue through the night," the official said.
"Visibility is almost non-existent. You can hardly see your hand in front of you face," said one diver when he returned to the harbour at nearby Jindo island.