Police, in coordination with Interpol, surrounded the residence of Ahmed Qaddaf al-Dam early this morning, Ahram Online reported.
Al-Dam was holed up behind iron-barred doors and windows and gun fire was reported at the scene. He had defected to Egypt at the beginning of the Libyan revolution in 2011.
The new Libyan administration has long been demanding al-Dam's repatriation along with 40 Libyans linked to Gaddafi's regime, to face trial for alleged involvement in crimes against humanity during the Gaddafi era.
Al-Dam, who was also coordinator of Egyptian-Libyan relations during Gaddafi's rule, has large investments in Egypt.
The official MENA news agency reported that he will be handed over to Libyan authorities who want to put him on trial.