Amid unprecedented security, police brought Jagan, as he is popularly known, from Nampally Court Complex to th jail located in the old city of Hyderabad.
After spending the entire day in court, a tired-looking Jagan greeted media persons and security personnel with folded hands before entering the jail.
The CBI court sent the YSR Congress Party leader to judicial custody till June 11 while dismissing his bail petition.
The court also dismissed CBI's petition seeking 14-day judicial custody of the accused. It granted special category status to Jagan, one of the richest MPs in the country with declared assets of Rs.356 crore last year.
Judge A. Pullaiah, who heard arguments from both sides in the morning, pronounced his order around 4.30 p.m.
Jagan's entry into the jail in the evening brought an end to the suspense which began Friday with the agency summoning the 40-year-old for questioning. He was arrested Sunday night.
The son of late chief minister Y.S. Rajasekhara Reddy is accused of corruption, cheating, criminal conspiracy, criminal breach of trust and falsification of accounts.
The CBI charges Jagan with having amassed huge wealth after his father became chief minister in 2004. YSR, as he was popularly known, died in a helicopter crash in 2009.
Jagan's mother Vijayamma, who sat on indefinite fast in the morning at their residence to protest the arrest, broke down after hearing news of being sent to jail. She called off her fast and announced that she would campaign for the party in June 12 by-elections to one Lok Sabha and 18 assembly seats.
"I am confident that my son will soon come out," she said while accusing Congress of political vendetta. She alleged that the arrest was aimed at preventing him from campaigning.
Chief Minister N. Kiran Kumar Reddy condemned Vijayamma's allegations against Congress president Sonia Gandhi. He said the Congress had nothing to do with Jagan's arrest as the CBI was carrying out the investigations on the direction of the court.
Jagan is the number one accused in the case, the CBI registered in August last year following direction from the Andhra Pradesh High Court.
Earlier, during the hearing in the court the CBI alleged that Jagan became richer in a short span of time by looting the public money.
"Jagan enriched himself by dubious mechanism by sending the funds abroad and getting the same invested in his companies," said senior CBI counsel Ashok Bhan, accusing Jagan of running a "hawala" racket.
Jagan's counsel menawhile argued that the arrest was illegal and amounted to contempt of court as he was arrested a few hours before he was scheduled to appear in the court in response to the court summons.
The counsel wondered why the CBI choose to question and arrest Jagan at this stage when the investigations into the case were going on for the last nine months.
Looking uncomfortable, Jagan was seen dozing off in the court hall. He appeared to have spent a sleepless night in the CBI custody at Dilkusha Guest House.
Jagan was scheduled to appear in the CBI court with regard to the first charge sheet filed by CBI on March 30. The judge first took up this case for hearing and, barring Jagan and his close aide Vijay Sai Reddy, granted bail to remaining 11 accused.
Meanwhile, a day-long shutdown called by YSR Party to protest Jagan's arrest evoked poor response. The shutdown call had no impact on normal life, except in Jagan's native Kadapa district.
Police arrested or kept under house arrest a large number of YSR party leaders and activists across the state to prevent them from enforcing the shutdown.