The clan allegedly made millions of euros through its control over the Sant'Anna Cara migrant centre on Isola di Capo Rizzuto, Calabria.
In the early hours of the morning, police arrested 68 people including local priest, Edoardo Scordio.
"Over 500 agents overnight arrested 68 people... accused of mafia association, extortion, carrying illegal weapons, fraud, embezzlement to the detriment of the state, [and] theft," Catanzaro police said in a statement.
Many of the arrested belonged to the Arena clan, a branch of the 'Ndrangheta mafia, Italy's largest and most powerful organised crime group.
The ‘Ndrangheta is based in the southern Italian region of Calabria and is renowned as one of Europe's biggest cocaine importers.
Police also arrested Leonardo Sacco, head of the Catholic Misericordia association which officially manages the migrant centre.
Authorities believe the 35-year-old helped the mafia clan win contracts for supplying services to the centre, giving it access to EU and state funding intended for the care of detained migrants.
Around 103 million euros of state funding was designated to the migrant centre over nine years between 2006-2015.
Of that amount, at least 36 million euros ended up in the pockets of the mafia clan.
