Officers arrested Hamid Hakkar, 47, on Monday in the port of Malaga in southern Spain along with two Spaniards suspected of helping him hide, police said in a statement.
"He was disguised as a devil to blend in among the party-goers," the statement said.
Police released a photo of the red mask with black horns and sharp teeth which the man was wearing at the time of his arrest along with a black cape and wig.
The authorities said the man of Algerian background is on France's most-wanted list for murder, drug trafficking and money laundering.
In 2005 Hakkar was sentenced by a French court to 15 years in jail after finding him guilty of the murder of a minor drug trafficker.
He has been on the run since November 2013 when he did not return to a jail in northern France after being granted a temporary leave.
Hakkar -- who went by the name "Julio" -- was jailed for two years in 2010 for his role in helping Italian bank robber Antonio Ferrara escape from a French jail.
He had escaped himself from a Paris jail in 1998 by taking the place of another man in the visiting area who had come to see him at the prison. Hakkar was re-arrested in 2003.
Spanish police said they began investigating in mid-October when officers in Malaga found a "hitman's kit" that included two guns, a silencer, ammunition, eight mobile phones, false identity papers and 5,000 euros
($5,500) in cash at a house in the southern city.