Gilani said there was insufficient evidence to warrant the arrest of Saeed, who moves freely in Pakistan and heads outlawed Jamaat-ud Dawah.
"If you arrest him, that means he will be released by the courts. For the courts you need more evidence," Gilani told the Daily Telegraph in London. "You know the judiciary is completely independent in Pakistan."
The US has offered a USD 10 million reward that could lead to arrest or conviction of Saeed, accused of plotting the Mumbai attacks that claimed 166 lives in November, 2008.
Gilani also denied reports of presence of al Qaeda's new leader Ayman al-Zawahiri inside Pakistan.
"Why should I think he (Zawahiri) is in Pakistan?" he asked.
Noting that the CIA and Pakistan's ISI were co-operating closely, he said: "They should work together and if there is any credible, actionable information, please share with us so that we should catch hold of him. You have claimed that somebody has said that he is in Pakistan: if there is any information, please share with us."
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Asked for his own view on whether Zawahiri was in Pakistan, the prime minister replied: "We don't think so."
US Secretary of State Hillary Clinton has recently said that Zawahiri was in Pakistan.
Gilani also expressed confidence that cricketer-turned- politician Imran Khan would not pose a challenge in the next elections due in 2013.