Kenneth Joseph Coombs, of Illinois, frequently visited Nepal and was a serial paedophile, said Superintendent of Police Dibesh Lohani of the Central Intelligence Bureau.
Coombs introduced himself as a mobile phone app developer. He was popular in Kathmandu's tourist areas as a professional tarot card reader and has claimed to have written two books on the art and two on mobile apps.
His Facebook profile says he studied Chemistry at Southern Illinois University, Edwardsville, police said.
He allegedly took help ofa 21-year-old local youth to lure children to his hotel room, where he allegedly sexually abused them.
The youth has also been arrested on Friday.
They rescued five children, aged between 6 and 12, from the room.
The police haveseized Coombs' laptop, camera and mobile phone, suspecting he might have filmed his sexual acts. Both the suspects have been found to have posted their photographs with several young boys on their Facebook accounts.
The CIB swung into action after receiving complaints from some of the victims' family members.
All the victims are said to be boys in their teens.
The American national and his Nepalese accomplice were presented before the Kathmandu District Court and remanded into custody for further investigation, police said.
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