The suspect, 21-year-old Rudy Hermann Guede from the Ivory Coast was seized in the western German city of Mainz while travelling on a bus or a train, a police spokesperson said.
"He was travelling without a valid ticket," the spokesperson said, without giving further details.
Fingerprints at the scene
Guede, already known to Italian police, faces charges for the murder and sexual assault on November 1 of British exchange student Meredith Kercher, who was found with her throat slit the following day, sparking lurid headlines.
Detectives reportedly discovered Guede's digital and genetic fingerprints at the scene of Kercher's murder in the central Italian city of Perugia.
Three other suspects were arrested on November 6 - Kercher's American housemate, Amanda Knox, Knox's Italian boyfriend Raffaele Sollecito and a Congolese musician and bar owner, Patrick Lumumba Diya.
Italian forensic experts said on Friday that they had found DNA traces of Kercher and Knox on a knife at Sollecito's home, which Kercher is not believed to have ever visited.
Investigators have reportedly found no evidence linking Diya to the scene of the crime.
Known for petty thieving
Italy's ANSA news agency reported that Guede was picked up as he was travelling on a train between Mainz and the nearby city of Wiesbaden.
Under Schengen procedures, he will be extradited to Italy, but it may take two or three days.
Guede has lived in Perugia since he was five and was adopted by an Italian family at age 17.
Italian and British press reports have described him as a drug dealer, while Ansa has said he is known to police for petty thieving.
The case has been beset by leaks from Italian police and intense media speculation that have been criticised by lawyers representing the accused.
Police said Kercher's assailants "apparently had a sexual motive" though initial autopsy results showed the Briton from south London had not been raped.
Blow dealt by a man
Investigators have said that the depth of the fatal knife wound in Kercher's neck indicated that the blow was dealt by a man. It was possible that Knox cut herself with the knife while holding it or washing it.
The probe had initially focused on a flick knife belonging to 24-year-old Sollecito as the possible murder weapon.
Kercher was in Italy on a student exchange programme.