Sullivan, who resigned shortly after the $4bn (£2.5bn) WorldCom accounting fraud was exposed, was taken into custody along with former controller David Myers.
It is not yet known what the two have been charged with. According to reports Sullivan and Myers were led away in handcuffs, in exactly the same manner as Adelphia founder John Rigas was arrested.
The arrests follow investigations by federal authorities into the two executives alleged role in the $4bn (£2.5bn) accounting scandal WorldCom admitted to in June.
The company said it inflated profits by claiming operating expenses as capital spending.