Officers are pursuing a male suspect aged about 50 who appeared in security video footage in a supermarket located in a town near Konstanz.
German police have detained the suspect for poisoning baby food.
Officials said they believe all of the contaminated food has been found but warned shoppers to remain alert to any possible signs of product manipulation.
The unnamed man, 55, was taken into custody on Friday evening in the Tübingen area south of Stuttgart.
Prosecutor Alexander Boger said initial findings showed that the man had a prior criminal record.
Supermarkets in southern Germany may still have poisoned products on the shelves and the blackmailer has threatened food across Europe if his demands aren't met.
If convicted, the man could face up to 15 years in prison for extortion. The suspect used ethylene glycol, a chemical in antifreeze and brake fluids, which can be fatal in large quantities.
Authorities and companies received an email this month threatening to poison unspecified food at branches of German retailers inside the country and beyond unless more than 10 million euros ($16.5 million) was paid by Saturday. Police are seeking one man seen on camera. He had enough to poison five more bottles.
Police, who seized the products from various shops in the city of southern city of Friedrichshafen - without publicizing it - on Thursday released CCTV images showing the main suspect holding a basket in a supermarket, and called on citizens to help so that he could be identified and arrested as soon as possible. The substance can cause kidney failure, brain damage and death.