After raids on his house in Hyderabad and 13 other places in Telangana and Visakhapatnam in Andhra Pradesh till late Tuesday, the agency arrested Rao, who was serving as ACP in Economic Offences Wing (EOW) at Central Crime Station (CCS) in Hyderabad.
The ACB seized valuable documents of 15 lands and other properties, cash, gold, silver items and other movable properties worth about Rs 3.5 crore.
The ACB will produce the official before a magistrate later in the day. The anti-graft agency is also likely to seek his custody to gather more information about his assets.
Special teams of ACB on Tuesday conducted raids at the residence of the ACP in Ashok Nagar in Hyderabad and simultaneous raids at his relatives and friends' houses in the city and other parts of Telangana and neighbouring Andhra Pradesh.
There are also allegations that he is involved in irregularities and misuse of his official position.
The ACP is the investigation officer in the high-profile Sahithi Infra fraud case, in which the accused duped customers to the tune of Rs 1,100 crore.