The man has been identified as 29-year-old Samsung D'Souza, an Indian working at a beach cafe where the victim, 15-year-old Scarlette Keeling, was last seen alive, senior Goa police official Kishan Kumar said.
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The arrest follows the testimony of an unidentified witness, who said D'Souza was seen in "a compromising position" with the girl hours before her bruised body was found on the Anjuna beach, Kumar said.
"Although the sex may or may not have happened with consent, since the girl was a minor a case of rape has been recorded" against D'Souza, Kumar said.
"More arrests and detentions are likely soon," he added.
The latest developments follow a fresh autopsy this weekend concluding that Keeling was murdered and did not drown as local police initially insisted, putting pressure on authorities to move quickly.
The second examination, almost three weeks after Keeling's death, was conducted by a panel of three doctors.
Police officer Kumar said two others detained earlier with