The man, who has not been officially named, was arrested as he landed at Heathrow Airport from Canada.
He has been taken to a west London police station on suspicion of conspiracy to murder Imran Farooq, co-founder of the Muttahida Qaumi Movement (MQM), in September 2010.
"Counter Terrorism officers investigating the murder of Imran Farooq have today arrested a man on suspicion of conspiracy to murder," the Metropolitan Police said here.
Farooq, 50, was on his way home from work when he was attacked outside his home at Green Lane in north London's Edgware area on September 16, 2010.
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A post-mortem gave his cause of death as multiple stab wounds and blunt trauma to the head.
A five-and-a-half inch bladed kitchen knife and a house brick used in the attack were recovered at the scene.
Farooq had been living in London in self-imposed exile since 1999.
"They believe his murder would have required careful planning and would have required help from other people, some of whom may have provided assistance or information unwittingly," the Met said in its statement.
A reward of up to 20,000 pounds has been offered for anyone providing information leading to the identification, arrest, and prosecution of those responsible for the politician's murder.
"We understand that people may have concerns in speaking to the police and would like to offer reassurance that information will be dealt with sensitively," the Met has said.
Television reports said they carried out a 55-hour search at two north-west London addresses and confiscated several documents.