Germany's Federal Prosecutors' Office said the 32-year-old German citizen, identified only as Andre E., is suspected of being an accessory to crimes, inciting racial hatred and supporting the far-right terrorist group.
Among other things, he is believed to have produced a video in 2007 in which the group claimed responsibility for its killings and attacks, prosecutors said.
A special operations team arrested the suspect near Berlin in a morning raid, and investigators searched four apartments in different cities. The man was flown by helicopter to Karlsruhe in southern Germany where he was to be brought before a judge later in the day.
The neo-Nazi group is suspected of killing eight people of Turkish origin and a Greek man between 2000 and 2006 and a policewoman in 2007. It is also being investigated in connection with several other possible hate crimes and a string of bank robberies over the past decade.
Prosecutors said the group is believed linked to two bombings in Cologne targeting foreigners in 2001 and 2004, which injured more than 20 people.
Of the group's suspected founders, Beate Zschaepe, 36, is in custody, while Uwe Boehnhardt, 34, and Uwe Mundlos, 38, died in an apparent murder-suicide as police closed in on them earlier this month following a bank robbery.