Ansar Shah, 36, was stabbed to death in a car park on Ayr's seafront on October 4, 1993.
Police Scotland said the suspect had been arrested on a European arrest warrant in Frankfurt, Germany.
Proceedings to bring the arrested man back to Scottish jurisdiction are expected to begin "in due course", officers said.
The arrest was made after a joint operation involving Police Scotland, the UK National Crime Agency and the authorities in France and Germany.
"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.
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