Gang 'runner' had two machine guns on a Dublin street
The suspect in custody has a number of previous convictions including one for an assault in which a man's ear was severed.
He is considered "a runner" for the gang.
He also has a conviction for dealing cannabis and has served a number of jail sentences.
The gang has regrouped since Dunne was shot dead in a pub in Cabra in April 2010 and sources say they are once again involved in major crime rackets.
The mob is now led by a man in his 40s who has been a major target by gardai for years.
Sources say that last weekend's operation was specifically put in place to target this criminal's activities.
This gangster -- who has a pathological hatred of gardai and the media -- is suspected of directing the gang's activities since the murder of 'The Don'.
Senior sources have revealed that the gang has moved into extortion as one of their main sources of income and away from heavy drug trafficking.
A source explained: "They are targeting individuals and low-level drug users and trying to get money back that they are owed.
"The market for cocaine has gone down significantly due to the recession, so the gang are focusing now on extortion and using this money to invest in "big deals".
Considered a "smarter and sharper" criminal than Dunne, the new gang boss has not orchestrated a campaign of murder like 'The Don' was responsible for.
In fact, the only murder that gardai believe that Dunne's former gang has been directly involved in since Dunne's death is that of Tom McDonagh (49) in St Margaret's Halting site in Ballymun in September 2011.
A separate Finglas gang -- which had strong links to Dunne's crew -- are the chief suspects for the pub murder of drug dealer Alan McNally in February. The home of the gangster who now controls the gang was searched by armed officers investigating McDonagh's murder on two occasions since then but nothing of any evidential value was found there.
Sources say that the gang boss has been regularly spotted at a northside pub which gardai now described as "scrote central."
"It's not just northside gangsters drinking there anymore, but fellas from the across the city such as Crumlin and Tallaght socialise in the place.
"It is like a who's who of gangland in there," explained a source.
The Herald has learnt that security at the pub is also being provided by the gang.
Last December, two members of the gang were jailed for their involvement in an attack on a man in a busy Dublin shopping centre.
James Somers (25) of Balbutcher Lane and Barry Johnson (27), from Coultry Grove, both in Ballymun, were each sentenced to two years in prison with the final six months suspended for a violent disorder offence.
Somers will spend three years in jail as he was given a consecutive 18-month sentence for an unrelated drugs charge.
The criminal -- who has 14 previous convictions -- pleaded guilty to possession of €4,200 worth of heroin on May 23, this year, at the Plaza Apartments, in Ballymun.