Investigators for the UW-Madison Police Department concluded the 31-year-old woman had diverted 42 syringes containing morphine or another painkiller.
Hospital officials contacted campus police in March about an internal investigation of a nurse suspected of stealing pain-management drugs intended for patients.
Investigators determined the nurse was taking morphine syringes from a secured machine and replacing them with syringes containing water. A pharmacy technician noticed tamper-evidence caps on the drug syringes had been tampered with.
Police say it's unclear how many patients may have been affected. The nurse is no longer employed by UW Hospital.
She was arrested Thursday. The Dane County district attorney's office says the suspect was released from jail pending formal charges.