August Hanning, 80, served as president of the Federal Intelligence Service, or BND, from December 1998 to November 2005.
He was "strongly suspected of treasonous espionage, spying out state secrets, attempted treason, and espionage", the federal prosecutor's office said on Tuesday.
Hanning was arrested in Bad Toelz-Wolfratshausen in southern Germany.
A former aide of his, identified only as Manfred D, was also arrested on Tuesday in Steinfurt in western Germany.
He is charged with aiding and abetting attempted treason and treasonous espionage.
The statement did not reveal who the two men were suspected of spying for.
The prosecutor's office said Manfred D worked as Hanning's chief of staff.
After Hanning's tenure at the BND, he went on to serve as chief of staff for several subsequent presidents of the BND from March 2012 until March 2026.
"In his role, he had access to confidential information," the prosecutor's office said.
Both suspects are believed to have agreed, in the spring of 2010, to have Manfred D continuously transmit valuable intelligence from the BND to Hanning "in exchange for remuneration".
"The current findings suggest that, over the years, Manfred D provided Hanning with approximately 2000 documents, many of which contained classified information to be used exclusively by the federal intelligence service for internal purposes, particularly for executive intelligence briefings," the statement said.
Hanning used the information in his private consulting work, the statement said.
The office said "on one occasion, Hanning used classified intelligence provided by Manfred D to draft an analysis for an officer of a foreign intelligence service".
The office did not say which country the foreign agent worked for and said "it has yet to be determined if the material reached the intended recipient".
9°C