Radio station Europe 1 reported on Thursday that Michel Neyret was arrested and held in custody as part of an inquiry into corruption and drug trafficking.
The news caused shock as 55-year-old Neyret is a well-known figure in Lyon with a big media profile.
Neyret is second in command in the police judiciaire, an arm of the police force that operates under the direction of judges. It is tasked with gathering evidence and pursuing, arresting and interrogating suspects.
Newspaper Libération reported on Friday that other senior officials, including four judges, could be targeted in the inquiry which is being led by a Paris-based task force made up of the police inspectorate, IGS (Inspection générale de la police nationale), and the organized crime investigation agency, JIRS (Juridictions interrégionales specialises).
The affair could lead to an "earthquake in the police" said a source quoted by Libération.
Described by colleagues as an "old-style policeman", Neyret has been an important figure in Lyon since he headed up the anti-gang division in the 1980s. He was featured in a TV documentary earlier in September about organized crime.
Neyret also recently acted as an adviser on a film about gangs in Lyon in the 1970s and 1980s. The film, Les Lyonnais, will be in cinemas in November.
Some of his colleagues expressed shock and even suspicion about the arrest.
"We're speechless about this," said one officer, reported in Le Parisien. "Neyret is someone with integrity, we can't believe it. He's definitely a victim of a set-up."