MEXICO CITY—The arrest on corruption charges of the head of Mexico's teachers union was widely seen Wednesday as a double win for President Enrique Peña Nieto, striking a blow against a controversial political figure and reasserting state authority over special interests.

Elba Esther Gordillo, one of the country's most powerful political figures of the past two decades, appeared in a televised courtroom inside a grim Mexico City prison to hear charges of money laundering and organized crime read out against her.

The government alleges Ms. Gordillo, arrested Tuesday, embezzled as much as $160 million from the coffers of the public teachers' union. The somber-looking union leader declined to speak to the court, except to say it was a matter for her lawyers. Her lawyers didn't speaking court, nor could they be reached for comment.

Many Mexicans favored the move to confront Ms. Gordillo, 68 years old, who is famous for wearing designer clothing, undergoing multiple plastic surgeries, riding in luxury cars surrounded by bodyguards and flying in private jets. She has openly acknowledged a lavish lifestyle.

Meanwhile, a primary public school teacher here with 10 years' experience earns about $14,000 a year, according to the OECD, an organization of developed countries. She had a reported salary to tax officials of roughly $45,000.