The Prosecutor's Office say the priest had been under investigation since March 2013.
"After monitoring his phone calls, we gathered evidence of his links with the leader of the 18th street gang, Carlos Ernesto Mojica Lechuga, who is in jail" said prosecutor Allan Hernandez.
"He was doing whatever Mojica Lechuga asked him to do," Mr Hernandez added.
Prosecutors say the priest successfully intervened to have a gang member transferred to a different jail at the request of Mojica Lechuga. He has also been accused of smuggling mobile phones and other objects to gang members in prison.
One of the phones was used to coordinate an extortion operation against shopkeepers and stallholders in the town of Santa Ana, Mr Hernandez said.Padre Toño has now had an opportunity to speak to the press. The website of La Pagina carried the text of its interview with the priest who serves in the parish of St. Francis in Mejicanos. Padre Toño denied commiting any crime:
La verdad es que yo no he cometido ningún ilícito, el único delito que pude cometer es ser excesivamente honesto pero en este país ser muy honesto es un delito
The truth is that I have not committed any crime. The only crime that I could have committed is to be excessively honest, but in this country to be very honest is a crime.Padre Toño indicated that he had met with the Attorney General Luis Martinez in the past where they drank coffee and chatted. He said Martinez had send him direct messages through Twitter. With this prosecution, Padre Toño now sees the prosecutor as "bipolar." The priest described his arrest as political persecution and an attempt to intimidate him.
The archbishop of San Salvador indicated that the church was surprised and worried by the arrest of Padre Toño. While the church expects that the system of justice will clarify the facts, the archbishop said it was right to remember all of the good that Padre Toño had done for the people of his parish in Mejicanos.
Other religious leaders who make up IPAZ, the pastoral initiative for peace which supports dialogue with gang members, expressed concern that their work in gang-conflicted communities would now become criminalized.
Meanwhile. there were protests over the arrest in Spain where Padre Toño was born. From the BBC:
Hundreds of people in the Spanish town of Daimiel have marched to demand the release of a Roman Catholic priest detained in El Salvador....
Demonstrators say Father Tono has dedicated much of his life to helping gang members turn away from crime...
More than 300 of Father Tono's supporters, including Mayor Leopoldo Sierra, marched through the streets of Daimiel in Spain on Sunday. Among them was a former Salvadoran gang member, Isamar Orellana, who now lives in Spain.
"I am a living example of how much Father Tono has done to help us get out of that difficult world," Ms Orellana told the EFE news agency. "He was a wonderful person to me, the father I never had."