Former Nazi and cult leader Paul Schaefer has been charged with the 1976 disappearance of an opponent of former Chilean dictator Gen Augusto Pinochet.
Paul Schaefer was the supreme ruler of the closed community
Photographer and left-wing activist Juan Maino was arrested and taken to Mr Schaefer's secret commune, Colonia Dignidad, and never re-appeared.
Mr Schaefer was also questioned over the allegation he abused 26 children.
The German, 83, who was deported to Chile from Argentina, already faces charges over another disappearance.
Both Juan Maino and Alvaro Vallejos were last seen at Mr Schaefer's secluded compound after being arrested by Gen Pinochet's security forces.
Chilean prosecutors and human rights activists have long asserted that Gen Pinochet's military government used Colonia Dignidad as a centre for interrogation and torture.
"Schaefer's arrest was very important," said prosecutor Sergio Concha, representing Mr Maino's family.
"We knew about the link between Colonia Dignidad and Juan Maino's disappearance, but now that he is available for the judge to interrogate, we can prosecute."
Chile's most wanted fugitive, Mr Schaefer was a corporal in the German army during World War II before running a religious commune in Chile.
He established the commune south of the Chilean capital, Santiago, after fleeing child abuse allegations in Germany in 1961.
In November 2004 he was convicted of child abuse in absentia by a Chilean court, but those charges are being re-submitted to the courts now Mr Schaefer is in custody.
Colonia Dignidad was shut off from the outside world
He escaped from Chile in 1997 shortly before police raided Colonia Dignidad, and spent almost eight years on the run.
He was arrested in Buenos Aires on 12 March and deported back to Chile to face charges.
He is also wanted for questioning in Germany on suspicion of the abuse and corruption of minors, and is under investigation in France.
In addition, he is wanted for questioning about the disappearance in 1985 of Boris Weisfeiler, an American-Jewish mathematics professor of Russian origin.