Police Scotland said the man, who cannot be named at this stage, was arrested over the murder of Pakistani-origin Ansar Shah in the seaside town of Ayr in Ayrshire on October 4, 1993, and will now be returned to Scottish jurisdiction.
"It is anticipated that proceedings to return the man to Scottish jurisdiction will take place in due course," a Police Scotland statement said.
The arrested man is believed to be Indian-origin Avtar Singh, who was arrested as he landed in Frankfurt from a flight from Delhi.
Shah, the owner of Armaan Brasserie which has since been renamed as Ayr India, was stabbed to death outside the eatery when a group of Pakistanis clashed with Indians, the 'Ayrshire Post' had reported at the time.
Two other men had been severely injured in the attack and treated in hospital.
A nationwide manhunt was launched for Singh, also known as Tony and Dari, who had worked as a waiter in the Jewel in the Crown restaurant in Kilmarnock, Ayrshire.
Detective Chief Inspector Mark Bell of Police Scotland Homicide Governance Review said, "Police Scotland is committed to pursuing those persons who are allegedly responsible for the gravest of crimes.
"Time and location is no barrier to the efforts and determination of our staff and partners to pursue justice for victims and their loved ones."
The arrest follows a joint operation coordinated from the Scottish Crime Campus, and led by Police Scotlands Homicide Governance and Review Team, involving participation with Police Scotlands International Assistance Unit, Crown Office and Procurator Fiscal Service and Law Enforcement partners across Europe including Europol, French and German authorities, and the UK National Crime Agency (NCA).
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