The entrance tests for various professional courses like medical and engineering and also for recruitment in government services, had been held by the board.
"Sharma was arrested by the STF in connection with the scam," a senior STF official told PTI.
The former Minister was taken into custody from his official residence, 74 Bungalow area in Dayanand Nagar by the STF sleuths.
The STF had earlier questioned him in connection with his alleged involvement in the contractual teacher recruitment scam and also shown him the list of candidates, the STF sources said, adding, an FIR in the case has already been registered against him sometime back.
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Sharma was the Public Relations, Culture, Technical and Higher Education Minister in Chief Minister Shivraj Singh Chouhan's cabinet in the second term. However, he had lost the last assembly elections from Sironj constituency in Vidisha district.
Meanwhile, Leader of Opposition in Madhya Pradesh Assembly, Satyadev Katare alleged that STF is not arresting the "big fish" involved in the scam.
Demanding Chief Minister's resignation, Katare asked for the probe to be handed over to the CBI.
However, the state Higher and Technical Education Minister, Uma Shankar Gupta told reporters that the BJP government has never interfered in any administrative action in the last 10 years.
Following a petition, Madhya Pradesh High Court is monitoring the scam on a regular basis and directed the STF to submit a progress report to it periodically.