A murder inquiry was launched after police hunting for 12-year-old Tia found a body at the house Stuart Hazell shares with Tia's grandmother in New Addington, south London.
The body, which has not been formally identified, was removed from the property late on Friday night.
A post-mortem is expected to take place in the coming days.
Hazell, 37, was spotted in the south London borough of Merton hours after police launched a manhunt for the suspect and warned members of the public not to approach him.
A Scotland Yard spokesman said Hazell was arrested in a public place on Friday evening after he was identified by a member of the public.
Tia was last seen on August 3 at the home of her grandmother, Christine Sharp. Hazell is believed to be the last person to see her.
He was interviewed as a key witness earlier this week but then released.
The announcement that a body had been found came just a few hours after police began a forensic search of the terraced house.
Mrs Sharp, who left her home with police shortly before the forensic search began, told reporters earlier that her boyfriend was out helping in the hunt for Tia.
On Friday, Police Commander Neil Basu defended the investigation so far, saying Ms Sharp's residence was searched three times before the body was found.
"A number of searches took place at the address. When Tia was first reported missing, officers searched her bedroom as is normal practice in a missing person’s enquiry," he said.
"A further search of the house took place in the early hours of Sunday morning by a specialist team.
"This was then followed by another search of the house by specialist dogs on Wednesday lunchtime.
"What we now need to establish is how long the body had been in the place where it was found.
"This will be subject of the ongoing investigation and it would be wrong to jump to any conclusions until all the facts have been established."
Between 80 and 100 officers had been involved in the search for Tia, which included scouring woodland near the New Addington house.
Members of the local community also helped with the hunt.
A vigil with flowers, notes and candles has been set-up near the scene, and many neighbours have expressed their heartbreak at how the case has unfolded.
Alston Millington, 32, said: "Personally, I was hoping she had a bit of trouble at home and had run off, rebelling against the family, maybe.
"I was hoping she would be found somewhere with somebody.
"It is very hard to get out of Addington without being seen in either a car, tram or bus. It is such sad news."