"Extortion has become the top way of creating wealth for Cosa Nostra in the district of Palermo," Francesco Messineo told journalists.
"There's continuous activity and we are only managing to detect the tip of the iceberg," he added.
Messineo's comments came after anti-mafia police Tuesday arrested 37 people suspected of extorting so-called 'protection money' from over 30 local business people in Palermo.
In addition to extortion, those arrested on Tuesday are suspected of mafia association, robbery and drugs trafficking as well as abetting mafia fugitives.
Tuesday's operation was launched after a handful of alleged exortion victims went to the police - a novelty in Palermo, according to investigators.
Prosecutors also drew on evidence from some recent mafia turncoats, investigators said.
Messineo lamented the "scant" cooperation Italian authorities received from mafia extortion victims generally.
"Hardly anyone voluntarily reports extortion to police and it's an uphill struggle but we mustn't be discouraged," he said.
Extortion was on the rise because jailed mafia members and their family need money, according to the commander of the Italian paramilitary police's anti-mafia division in Palermo, Antonio Coppola.
"It's the only way to keep the organisation going: otherwise the whole criminal system would collapse," Coppola said.
The Italian government has vowed to stamp out organised crime in Italy and since taking office in May 2008 has arrested hundreds of mafia suspects and seized billions of euros of mafia assets.