The 26-year-old man smuggled the alcohol from neighbouring Gujarat state and delivered it to local dealers in Mumbai, the police said.
The liquor was then sold from illegal liquor vends in Mumbai.
Toxic alcohol deaths are a regular occurrence in India, where people often drink cheap bootleg liquor.
The death toll in the latest incident has risen to 102, and 40 others, suffering from symptoms of poisoning, are being treated in hospitals.
Seven people, including two women, have been already arrested in Mumbai in connection with the incident.
Police said Mohammed Latif Khan, the main supplier, had fled Mumbai after the incident and had been staying at a friend's place in Delhi.
"During questioning, we got to know that the suspect used to source the illicit liquor from Gujarat's Ahmedabad [city]," a police official told The Indian Express.
Gujarat is the only state in India where alcohol is totally prohibited by law.
Police suspect the deaths were caused by methanol poisoning, but are still awaiting reports.
Distilling alcohol safely requires a precise control of the temperature, because if that rises above a certain level then methyl alcohol can form.
Sometimes, certain herbs or chemicals might be added to increase the strength or improve the flavour, and these can react badly with other chemicals.
At least 29 people were killed after consuming toxic alcohol in Uttar Pradesh state in January.
India has witnessed many other incidents of toxic alcohol deaths in the past:

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Britain led New Zealand 21-0 at half-time and clung on as the All Blacks responded with three second-half tries.
They go on to face Argentina in the quarter-finals at 22:00 BST.
New Zealand were in danger of going out but qualified after Fiji's 24-19 win over the USA, and the All Black Sevens will play Fiji in the last eight.
The other quarter-finals will see Japan take on France and South Africa play Australia.
Britain's men are aiming to secure a medal in Rio, having seen the women's team play so well to reach the semi-finals, then miss out on bronze after a 33-10 defeat by Canada in the third-place match.
New Zealand, meanwhile, have had a difficult tournament, with 15-a-side World Cup winner Sonny Bill Williams being ruled out of the Olympics after partially rupturing an Achilles tendon during the All Blacks Sevens' shock 14-12 defeat by Japan.
The All Blacks Sevens only made it through to the last eight as one of the two best third-placed finishers in the group stage.
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Police in the Indian capital Delhi say they have arrested a man who supplied the toxic alcohol which has killed more than 100 people in the city of Mumbai.
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Britain's men finished top of Pool C in the Olympic rugby sevens by beating New Zealand 21-19 to make it three wins from three matches.