The Reservoir Dogs actor apparently had double California's blood alcohol limit when he was stopped by police on the Pacific Coast Highway on Wednesday (September 13).
Law enforcement sources told TMZ that Madsen was taken into custody when he couldn't pass a field sobriety test and registered a .20 on a breathalyser.
Madsen apparently remains in jail, with bail set at $15,000 (£9,307).
His lawyer denies that Madsen did in fact fail any field sobriety tests and expressed the star's belief that "the breathalyser test is flawed".
Earlier this year, Madsen was arrested following an allegedly violent argument with his teenage son. All charges against the actor were subsequently dropped.