His Saunier Duval team pulled out of the race following the announcement by the French Anti-Doping Agency (AFLD).
"This is a decision of the team and is not dictated by (Tour organisers) ASO," Saunier Duval sports director Matxin Fernandez told reporters.
"We suspend the activities of the team until we understand what has happened," Fernandez added.
The 24-year-old Ricco, who has won two stages in this year's race, becomes the third rider to test positive for EPO (erythropoietin) on the 2008 Tour after Spaniards Manuel Beltran and Moises Duenas Nevado.
"It's for the same product as the other two," AFLD president Pierre Bordry told Reuters.
Ricco, who was ninth overall two minutes and 29 seconds behind leader Cadel Evans of Australia, tested positive after the fourth stage, an individual time trial in Cholet last week, Bordry added.
Police came to the Saunier Duval team's bus in southwestern Lavelanet before the start of Thursday's 12th stage to Narbonne, witnesses said. Ricco then left in a team car escorted by police.
REALLY EFFICIENT
He was arrested three km from the team bus by the police and taken for questioning to the gendarmerie in Foix, a source within organisers ASO told Reuters.
"It shows that the controls are really efficient and that it is harder to get away with it," Tour de France director Christian Prudhomme said.
"It's completely shocking," International Cycling Union (UCI) president Pat McQuaid told Reuters.
"It would strike me now that someone would have advised those guys to take some form of EPO thought to be undetectable because we haven't caught guys in this fashion for a long time.
"He's not Spanish but he's connected to Spain," added McQuaid, referring to the fact that Saunier Duval are a Spanish team.
Italy's national team technical director Franco Ballerini said he hoped Ricco would be exonerated.
"I remember that even as a junior he had problems linked to doping and then everything was resolved because it was discovered that the readings were high physiologically," he told the Dire agency.
"I hope it is a physiological reading, otherwise words fail me."
Duenas Nevado is to be fired with immediate effect from his Barloworld team after his positive test, team manager Claudio Corti said on Thursday.
"He is to be fired today," Corti told reporters.
French prosecutors said on Thursday bags of blood and syringes had been found in Duenas Nevado's suitcases.
Last year's Tour was marred by doping scandals.
Then overall leader Michael Rasmussen of Denmark was kicked out of the race for lying about his training whereabouts and Kazakh Alexandre Vinokourov tested positive for blood doping.