26-year-old Qandeel's younger brother Muhammad Waseem was arrested in Dera Ghazi Khan district of Punjab Province late last night. He was later presented before media where he confessed that he drugged and strangled his sister.
Waseem, 25, said that he killed her as she brought "dishonour to the Baloch name" due to risque videos and statements that she posted on social media.
Her controversial pictures recently led to the suspension of Mufti Qawi's membership from the Ruet-e-Hilal committee, a top religious body.
"She wasn't aware I was killing her. I gave her a tablet and then strangled her," he said.
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The actor-cum-model was strangled to death in her house in Multan's Karimabad area in the early hours yesterday.
Qandeel's father, Muhammad Azeem, had lodged the FIR and named his two sons for killing her in Multan where she had come from Karachi to live with her parents on the occasion of Eid.
The father alleged that Waseem had taken this extreme step at the behest of his brother Mohammad Aslam Shaheen.
City police chief Azhar Akram said the younger brother fled after the crime to Dera Ghazi Khan with two of his friends.
Police was searching for the friends also.
Qandeel came from a humble background and became a social media sensation. She had received threats from her family to quit modelling and stop her provocative appearances on social media. Her brother had been threatening her over her Facebook posts and videos, the police said.
Her real name was Fouzia Azeem but she chose Qandeel Baloch as her pseudonym after stepping into modelling.
Qandeel became famous through her tireless self-promotion and suggestive "selfies" posted on social media and had amassed tens of thousands of followers.
Meanwhile, arrangements are being made to send Qandeel's body to her hometown of Shah Saddardin in Dera Ghazi Khan for burial.
Honour killing is common in Pakistan and every year hundreds of women are killed by male relatives for allegedly dishonouring the family.