The Japanese broadcaster NHK said Mr Ghosn was arrested on Monday after he voluntarily submitted to questioning by Tokyo prosecutors.
Nissan said on Monday it would fire Ghosn this week, while the Mitsubishi board will meet next week.
Ghosn gave up his role as CEO of Nissan last year and has said that he may step down as CEO of Renault before his four-year term ends in 2022, fuelling speculation the alliance could lose its architect and main leader of the past two decades.
Nissan's official statement said that, based on a whistleblower report, "Nissan Motor Co Ltd (Nissan) has been conducting an internal investigation over the past several months regarding misconduct involving the company's representative director and chairman Carlos Ghosn and representative director Greg Kelly". Nissan goes on to say that Ghosn has been found to be suspect of "numerous" acts of other misconducts, including utilizing company funds and assets for personal use.
Nissan and Mitsubishi have already said they will propose removing him as chairman.
Nissan has been slow to strengthen its governance, with outside directors linked to the alliance or lacking business experience, said Zuhair Khan, head of Japan research at Jefferies. The automaker also reports that it has been cooperating fully with Japanese investigators throughout the investigation.
"It's easy for a board to be alert when times are tough, but it's very important for a board to maintain their vigilance when times are good", she continues, adding that "sometimes boards can be deferential to an iconic CEO" such as Ghosn.More news: England All Out For 285 In Sri Lanka
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"This is an act that can not be tolerated by the company", he said during a news briefing.
A Nissan technician inspects the grill of a new 2016 Altima on the assembly line at the Nissan Canton Vehicle Assembly Plant in the US.
Nissan's CEO Hiroto Saikawa planned to propose to its board that Ghosn and Kelly both be removed from their posts, the company said in a statement.
Mr Kelly - who has also been arrested, according to the firm - was described as a close aide to Mr Ghosn.
Ghosn's name became well known in 1999 when he was sent from Renault to financially troubled Nissan as its chief operating officer.
Brazilian-born Carlos Ghosn, who is facing a pay scandal in Japan, has long stood out among the world's auto executives as a hard-nosed workaholic willing to take drastic measures to get companies back on their feet quickly. Nissan's German-listed securities plunged 12 per cent. Over the ensuing three decades, he earned nicknames for cutting costs at Nissan and its subsidiaries and served as a visionary for the Renault-Nissan-Mitsubishi Alliance.
The infractions are said to have occurred "over many years".
In the hours after news broke of Ghosn's alleged behaviour, both Nissan and Renault reaffirmed their commitment to the carmaking venture.