Police confirmed one suspect was in custody. He was detained near a car behind the Century Aurora 16 in the town of around 325,000 people.
He was found to be carrying a gas mask, rifle and handgun.
Police had also been searching for an explosive device outside the cinema.
They had been searching for a second suspect but said at a press conference there was currently "no evidence" of a second gunman.
They remained "concerned" and were trying to obtain more information.
Fox News reported that police were searching the suspect's apartment in Aurora.
Brenda Stuart, of 850 KOA Radio said the victims were shot dead but there may have also been an explosion.
Stuart told Sky News: "This started with a midnight showing of the new Dark Knight movie and the theatres were packed that were showing this movie.
"People inside tell us they thought it was part of the movie. They heard what they thought were firecrackers, loud bangs and all of a sudden they saw the bullets flying.
"Police officers are carting the injured to the hospital in their own cars, not waiting for the ambulances."
A makeshift hospital was set up at the mall to treat those wounded in the attack.
A witness told 9News that during a shooting scene in the film he heard loud bangs and a lot of smoke and initially thought they were live special effects put on by the cinema.
Projectiles came through the wall from the neighbouring theatre screening, where it appears the shooting occurred.
Witness Justin Joseph told local media that as the film was about to start a moviegoer stood up and turned to face the audience wearing a gas mask and body armour.
Witnesses heard two loud bangs which turned out to be tear gas. As mass panic broke out, people started to run and the gunman opened fire on "moving targets".
A witness told CNN that he saw a "guy slowly making his way up the stairs and firing, picking random people".
The BBC quoted the FBI as saying they were working with the local police but said it was still too early to say if there was a terrorism link.
Police Chief Dan Oates said city police were checking the area for explosives. Police believed more weapons may have been left in the cinema and the arrested man told them explosives were stored at his home.
Mr Oates gave an account of what happened during the attack at the multiplex.
"Approximately at 12.30 this morning a gunman appeared at the front of one of the theatres in the Century 16 theatre," he said.
"Witnesses tell us that he released some sort of canister. They heard a hissing sound and a gas emerged and then we know that the gunman opened fire."
Police then responded, finding the gunmen at the back of the theatre in carpark.
He said the shooting had gone on "for some time".
Mr Oates also appealed to the public for information.
Sky News showed live pictures of a bomb disposal robot examining the boot of the suspect's car in the cinema carpark.
Mr Oates said the man, who has not been named, carried three guns - a rifle and handgun and possibly a shotgun. They were found in the theatre after the shooting.
Witnesses told police that the man"just appeared" at the front of the cinema, possibly from behind the screen or a fire exit.
"Witnesses tell us he released some sort of canister. They heard a hissing sound and some gas emerged and the gunman opened fire."
He said that the motive was unknown "other than it was the latest Batman movie and there was a lot of people".
"The scene is still very active and we have little information for release at this time," police spokeswoman Cassidee Carlson said in a brief news release.
The suspect also indicated that there may be explosives in a Hyundai parked in the car park at the cinema.
Another witness reported seeing a police officer carrying an injured girl out of the building with gunshot wounds to her back.
Frank Fania of Aurora police told CNN the suspect was a younger adult male.
He could not give an exact age but he believed he was in his early 20s.
Hundreds of witnesses were taken by bus to a nearby high school for questioning.
Denver and Aurora are the principal cities of the Denver metropolitan area.
Another witness said the attacker was dressed all in black and was wearing a riot helmet, bulletproof vest and goggles.
Cellphone footage taken by a movie-goer inside the cinema showed scenes of chaos as people tried to flee the building.
Sky News broadcasting the cellphone footage showing bloodied moviegoers staggering through the foyer as panic ensued.
One man shown with blood seeping from his shoulder being escorted out by a police officer.
Some filmgoers were shown wearing Batman outfits, suggesting a man in a mask and body armour would not have looked out of place.
It was understood some off-duty police officers were in the cinema and were involved in the arrest.
Nicole Williams of the Swedish Medical Center in Denver said the hospital has received three gunshot victims - two men aged 20 and 18 and a woman aged 20.
The younger man was treated and released but the other two were taken into surgery and were in critical condition.
In April 1999 two teenage schoolboys shot and killed 12 schoolmates and a teacher at Columbine High School in Littleton, Colorado, before killing themselves.
Local reporter Justin Joseph of KDVR said that according to witnesses, the moment Batman appeared on screen a man wearing body armour and a gas mask and wielding at least one long gun stood up and faced the crowd.
What witnesses described as two "bombs" - now believed to be tear gas - were thrown into the crowd, he said.
"As people ran this gunman opened fire hitting people. Police sources have told us there are at least 10 bodies inside the cinema, most of them children or teenagers, and one baby," he was quoted as saying by the Telegraph.
A witness told CNN: "We heard anywhere from 10 to 20 shots and little explosions going on.
Shortly after that we heard people screaming.
"Then they came on PA system and said everyone needed to get out. As soon as we got out, there were people running around and screaming," the witness said.
Witness Chris Jones, who was in cinema 9, told DenverChannel.com he didn't see the gunman, he only saw a spark in the corner of the theatre.
"The lights never came on. When the shooting cleared, we just ran. When we got outside, it was chaos."
Mr Jones said he heard 20 to 30 rounds in a minute or two.
