A 27-year-old man who worked in at least two nursery schools has been arrested in Amsterdam on suspicion of abusing 30 to 50 young children.
Robert M - as he was named by police - was detained last Tuesday and more than 50 parents were contacted on Sunday.
A spokeswoman for the Dutch public prosecution service described the case as "huge" and "unprecedented".
The suspect was identified after a two-year-old boy's picture was shown on Dutch TV as part of a US inquiry.
Police said he had also worked as a childminder in the Amsterdam area.
They said they were trying to establish whether other people were involved in the alleged abuse of young children up to the age of four.
The man's male partner, 37, has been detained on suspicion of possession of child pornography.
Another employee at a nursery where Robert M, originally from Latvia, worked is also being held.
The case began when US authorities informed Dutch police that a photograph seized in a separate investigation had originally been taken in the Netherlands.
After the picture was broadcast on a Dutch TV crime show, the victim's parents are said to have come forward.
The Dutch public prosecution service said that medical and psychological help was being offered to all the families connected to the two nurseries.
"With regard to the abuse of small children, this is huge and unprecedented [for the Netherlands]," spokeswoman Ruth Gorissen told the BBC News website.
The mayor of Amsterdam, Eberhard van der Laan, told a news conference on Sunday night that the case involved "serious suspicion of grave abuse".
Meanwhile, Dutch media reported that a mother who had suspected that her child had been abused at one of the nurseries in 2008 complained she had not been taken seriously by either the nursery or the police.