Detectives raided a Mount Martha property, about 50km southeast of Melbourne, on Wednesday morning, arresting two people in their 70s.
Donning a beanie Mr Gatto arrived home escorted by an unmarked police car, opening the gate for officers in the late afternoon.
Police said detectives from Taskforce Hawk also executed warrants in the Melbourne central business district.
The pair were later released pending further inquiries.
"Police also seized a number of items including electronic devices and two controlled weapons including a baton and knife," police said in a statement.
"The investigation, which commenced earlier this year, remains ongoing."
Taskforce Hawk was established to tackle criminal behaviour in the construction sector.
Mr Gatto's name appears 165 times in barrister Geoffrey Watson's Rotting from the Top report, commissioned by former CMFEU administrator Mark Irving KC.
"Gatto claims he is a 'mediator and arbitrator' but others – including a federal judge – say he is 'a standover man and a gangster' … closely associated with a number of violent and dangerous criminals in Melbourne," the report said.
Mr Watson described what he called Mr Gatto's extortion model, where he would ring contractors and tell them he could stop work at a site at a moment's notice unless he was paid a fee.
Mr Gatto, who was acquitted of murdering Melbourne underworld figure Andrew Veniamin in 2005, has denied he was a construction industry standover man.
"The Big Build has never, ever paid me a penny," he told 10 News in February.
"The government has never, ever paid me a penny. The unions have never ever paid me a penny."
In March, Victoria's Labour Hire Authority confirmed it issued a notice of intention to cancel M1 Trades & Labour Pty Ltd's licence after the company was accused of links to Mr Gatto.
Mr Watson noted Mr Gatto denied ownership of M Group companies but said the claim was "transparently false", with "dummy directors" allegedly installed to do his bidding.
Premier Jacinta Allan on Monday suggested police and industry regulators were cleaning up the construction industry, with 88 criminal charges laid and more than 150 licences cancelled.
It came as her government committed to giving Independent Broad-based Anti-corruption Commission "follow the money" powers by late 2027, a decade after the watchdog called for the change.
