Pakistan on Monday ordered Hafiz Saeed, accused by the United States and India of masterminding the 2008 attacks on the Indian financial capital Mumbai, to be placed under house arrest.
The assaults around the city killed 166 people, including nine at the local Chabad outreach center.
The move came after years of pressure and could ease recently escalating tensions between the nuclear-armed neighbours. Saeed's continued freedom has long infuriated Islamabad's arch-foe India.
The United States has offered $10 million for information leading to the arrest and conviction of Saeed, who heads the Muslim charity Jamaat-ud-Dawa. Washington says JuD is a front for the Pakistan-based militant group Lashkar-e-Taiba.
"A large police team arrived [at JuD headquarters] and told us that Hafiz Saeed would be placed under house arrest," Nadeem Awan, a spokesman for the group based in the eastern city of Lahore, told Reuters.
An Interior Ministry source confirmed Saeed and the other men "are under house arrest" and on the exit control list, meaning they could not leave the country. India's foreign ministry did not immediately respond to requests for comment.
It was unclear why Pakistan decided to act now. A senior Pakistani defence ministry official said Islamabad had not heard anything from the new administration of U.S. President Donald Trump but had been feeling U.S. pressure on the issue.
"Trump is taking hard decisions against Muslim countries, there is open talk of actions against Pakistan also. So yes, this was a consideration," said the official.
Other government officials have said recently that a broader diplomatic campaign - pushed by India - to isolate Pakistan over its failure to go after some Islamist groups has taken a toll, even involving pressure from longtime ally China.
Rampage in Mumbai
The Mumbai attacks in 2008 brought Pakistan and India to the brink of war after 10 gunmen killed commuters, foreigners and some of India's wealthy elite in a rampage that included attacks on two luxury hotels, the city's Chabad outreach center and a train station. The Chabad house was run by Israeli-born American Rabbi Gavriel Holtzberg and his wife Rivka, who were both killed in the attack.
India accused Pakistan of sponsoring the attack through LeT, which Saeed founded in the 1990s. Pakistan has denied any state involvement and Saeed - who has distanced himself from LeT - has said repeatedly he was not responsible.
Saeed was put under house arrest after the Mumbai attack but was released about six month later in June 2009.
Awan said Islamabad had been under pressure from the United States to take action against Saeed or face sanctions. "This government has buckled under the pressure," he said.
The Punjab provincial government said Saeed and four other men were in "protective custody" because they violated a UN Security Council resolution passed after the Mumbai attacks.
Interior Ministry documents seen by Reuters named Saeed and four other men as members of JuD and Falah-e-Insaniat Foundation, a charity wing of JuD headed by Saeed.
One document said the government believed FiF was "acting in a manner that may be concerned in terrorism".
Previous Pakistani announcements of action against anti-India militant groups have rarely led to serious punishments for them.
Western countries have for decades accused Pakistan of harbouring Islamist militant groups and using them as proxies against bigger neighbour India, with whom it has fought three wars since independence. Islamabad denies having such a policy.
In recent months, Saeed has been holding regular press conferences about the security crackdown in Indian-controlled Kashmir, trying to highlight alleged civil rights violations against the mainly Muslim population there.
He told Reuters last month that he had no fear of arrest despite the appointment of a new army chief and a new head of the Inter-Services Intelligence spy agency.
Successive Pakistani governments have vowed to crack down against militant groups but lack of action against Saeed has often been seized on by India as proof that Islamabad was dragging its feet on tackling banned outfits.