Pratheepan Thavarajah, 32, was arrested on Thursday at Soekarno-Hatta International Airport in Jakarta just as he was boarding a flight to Kuala Lumpur, national police spokesman Anton Bahrul Alam told reporters.
"He is in our custody and we are investigating him for seven days before he is sent to the United States," Alam said.
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"Indonesia and America has no extradition treaty but ... in this case we will extradite him based on the good relations of both governments," he added.
Anton said Interpol in Washington issued a warrant for his arrest on August 20, 2006.
He said Thavarajah was wanted for allegedly smuggling firearms which could be used in terrorist activities into the United States and could face 15 years in prison if convicted.
He is being held at police headquarters in Jakarta.
"We are still checking his visa.
Investigations should be completed by Monday and then we will know where he has been and what he has been up to in Indonesia," Anton said.