The body of Jean Damascene Habarugira, a member of the United Democratic Forces party (known by its French acronym, FDU), was found on Monday, police spokesman Theos Badege said, 60 kilometres (40 miles) from where he had disappeared three days earlier.
FDU vice president Boniface Twagirimana, claimed 52- year-old Habarugira had been murdered because of his opposition to the government's agricultural planning policy in his home area of Ngoma, in the east of the country.
He said the party member disappeared after meeting a former soldier responsible for village security.
Badege confirmed the man in question, Bizama Theophile, had been detained on Sunday while investigations into Habarugira's disappearance were underway.
Another party member who claimed to have seen Habarugira's corpse said the eyes had been gouged out and the head almost severed.
The FDU is led by Victoire Ingabire who is serving a 15 year prison sentence for crimes including "divisionism", an offence of stoking the ethnic tensions that led to the 1994 genocide in which around 800,000 mostly Tutsi people died.
Regularly praised for its stability and economic performance, Rwanda often comes under fire for a lack of political freedom.
Kagame is running for re-election in August after the constitution was changed to allow him to run again.
He has been in charge since taking power at the head of a rebel army in 1994 and has already served two seven-year terms as president.
Several opposition parties are refused legal recognition by the authorities.
So far just three candidates have declared their intention to challenge Kagame who won previous elections with well over 90 percent of the vote.
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