The arrest on Friday of the suspect - described as "mentally disturbed" - came after German police alerted the public earlier in the week, saying a blackmailer was demanding millions of euros in cash.
To press the demand, the suspect allegedly poisoned five baby food products and alerted police to the store where they were placed in the southern city of Friedrichshafen on Lake Constance.
Following information received from the public, police detained the man near Tubingen, about two hours drive away from the store.
"The presumed blackmailer has admitted the accusations... during his appearance before the Ravensburg court" and said he did not put any other poisoned products in supermarkets, German authorities said.
At a press conference earlier in the day, police and prosecutors said the man had refused to shed light on his motives but that evidence implicating him was discovered at his home.
It also appears the man, who has not been named, acted alone.
Local deputy chief of police Uwe Stuermer described the man as "eccentric" and mentally disturbed.
He was arrested after authorities released surveillance footage of the man, whom they earlier described as aged 55, wearing glasses and a white cap.
The baby food - which had been laced with ethylene glycol, a chemical found in anti-freeze and brake fluid - was found and removed.
But a nationwide appeal for information was launched on the suspect and a warning issued about the potential for other food contamination.