Police nabbed 41-year-old Emanuele Alfano, a former trainee priest as he was boarding a cruise ship to take up a job in its casino.
Alfano allegedly paid a boy for sex and had sex with another boy and acted as a pimp for disgraced Genoa parish priest Riccardo Seppia, procuring him numerous boys for sex.
The Vatican suspended Seppia after police arrested him last week for suspected sexual violence against a 16-year-old altar boy and sex abuse of other youths, as well as supplying cocaine.
Investigators opted to arrest Seppia last Saturday following surveillance of his mobile phone and obscene text messages allegedly sent to teenage boys, including a 15-year-old with whom he had arranged a sexual encounter later that day.
Investigators believe Seppia abused "at least five" teenage boys in his parish.
Alfano was arrested after investigators intercepted a phone call made to Seppia in which the priest told him he had kissed the altar boy.
He and Seppia are being held in Marassi prison. Seppia has already been quizzed by police but it is not known what line of defence he is taking.
In an unusual move, the archbishop of Genoa, cardinal Angelo Bagnasco attended a mass last Saturday at Seppia's church in the Sestri Ponente district, where he expressed his "shame" for Seppia's alleged behaviour.
In another address on Thursday in Genoa, Bagnasco went further. Referring to Seppia solely as "our brother" he said that if the allegations against him proved to true "they disfigure the beauty of the soul, scandalise and wound the image of the Church."
Bagnasco's swift, hands-on reaction was a marked departure from the Vatican's long-held habit of defending members of their ranks.
The clerical sex abuse scandal that has rocked the Catholic church in several countries has only recently emerged in Italy, where the Vatican is politically influential and citizens are often deferential towards priests.
Two priests have this year been jailed for sexual offences against children in Italy.