The youth, believed to be an Arab national, arrived in Lahore for leading a "fidayeen" (suicide) mission and was allegedly provided shelter by the Islami Jamiat Tulba (IJT), the student wing of Jamaat-e-Islami.
Intelligence operatives raided a room in Punjab University Hostel No 1 on Tuesday night and arrested the high-profile suspect. He was taken to an undisclosed location for interrogation.
Punjab University spokesman Khurram Shahzad told PTI that intelligence agencies did not inform Vice-Chancellor Mujahid Kamran about their operation.
Shahzad said the university had launched an investigation into the matter as it believed that some elements in the IJT had links with militant organisations.
The university is considered a stronghold of the IJT, which has denied any link with the arrested suspect.
"We had not given shelter to any suspected terrorists," IJT spokesman Abdul Moqeet told PTI.
Sources said the arrested youth was allegedly involved in subversive activities in Pakistan's tribal areas and had come to Lahore for leading a mission.
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