The man was arrested from St Leonards-on-Sea in East Sussex by the Metropolitan Police's counter-terrorist officers, the Guardian said.
The man was arrested in relation to allegations of torture committed in the Himalayan country in 2005, a year before the armed conflict between Maoist extremists and the government ended.
The man, who has not been named, was taken to a police station in East Sussex where he remains in custody while detectives searched a residential address in the seaside town.
The Maoist insurgency in Nepal claimed more than 12,000 lives, according to estimates, the daily said.
In February 2005, King Gyanendra unilaterally declared a state of emergency and took over all executive powers of the government to establish an absolute monarchy.
Thousands of people were arrested in a year-long crackdown by the government headed by the king amid allegations of human rights abuses, including the use of child soldiers by both sides.