Dahlia Yehia arrived in Nepal on July 20 to serve earthquake victims in Pokhara, a popular tourist spot.
Police investigations suggested that the woman was hit with a hammer and a 'lathi' while she was asleep at a rented accomodation in the town.
Her body was found dumped in a sack near a river.
Police on Thursday arrested 30-year-old Narayan Paudel, who admitted to killing the woman.
The motive behind the murder, however, is not yet ascertained. Home Ministry spokesperson Laxmi Dhakal said the incident is still under investigation.