A 58-year-old man identified as Erhan G was arrested in Berlin on Monday on suspicion of dealing in the stolen goods.
Prosecutors said he has "given a broad confession" in the case and provided information about stolen personal items from Lennon that remain undiscovered.
Police had on Tuesday announced the recovery of around 100 items, including diaries, a cigarette case and two pairs of Lennon's trademark round spectacles.
But numerous items are still missing.
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"Among those we are looking for are a sculpture, walking sticks as well as several personal recordings and other writings," said prosecutors in a statement.
The objects were allegedly stolen by the driver of Lennon's widow Yoko Ono from her New York home in 2006. They were discovered this year at a bankrupt Berlin auction house.
The driver, Koral Karsan, lives in Turkey and is out of reach of German law enforcement.
Along with co-Beatle Paul McCartney, Lennon wrote some of the Fab Four's biggest hits including "Help" and "With a Little Help from My Friends", before the band split in 1970.
His possessions have since become collectors' items.
A leather jacket supposedly worn by Lennon sold for 10,400 pounds (USD 13,800) at an auction in England in February.
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