Xulhaz Mannan, 35, editor of a magazine for Bangladesh's gay and lesbian community, and a 25-year-old fellow activist Mahbub Tonoy were hacked to death in an apartment here on April 25 by up to seven attackers carrying machetes and guns.
The 37-year-old suspect, Shariful Islam alias Shihab, was arrested from Kushtia early today.
"He is a member of the banned Ansarullah Bangla Team," Monirul Islam, chief of counter-terrorism unit of Dhaka Metropolitan Police (DMP) told reporters at a press conference.
The killers were well trained and they had planned the killing two months ago, he said while describing the arrest as a "breakthrough" in the high-profile case.
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"They killed the gay rights activists because they were creating confusion about Islam," Islam said.
He was produced before the court of Additional Chief Metropolitan Magistrate Kaisarul Islam, which placed him on three-day remand this afternoon. Detectives sought a ten-day remand for him.
Police seized four mobile phone sets, a tab and a USB flash drive from his possession, Islam said.
"Shihab has been hiding in Khulna since the killing," Detective Branch Deputy Commissioner Mashrukur Rahman Khaled.
On the evening of April 25, assailants barged into the apartment of Xulhaz Mannan, a programme officer with the USAID and an editor of Bangladesh's first LGBT magazine.
Xulhaz and his theatre activist friend Tonoy were hacked with meat cleavers on their head and neck, which forensic experts said was to ensure instant death.
Witnesses said five to seven people, clad in T-shirts and jeans, were involved in the killings and fled the scene after firing from guns, shouting 'Allahu Akbar'.