A search of the family's former home in Sydney earlier in 2018 failed to turn up new evidence. However, police on Wednesday said the arrest followed three years of renewed investigations.
"We are confident with the case," Superintendent Scott Cook told reporters. "We won't give up on trying to identify the whereabouts of Lynette Dawson, but, from our perspective, it is not crucial to finalising the matter."
Two separate inquests have recommended for murder charges to be laid against a "known person".
However, prosecutors have previously said there was insufficient evidence to lay charges. No trace of Lynette Dawson has ever been found.
An inquest in 2003 found that Chris Dawson, a former high school teacher and rugby league star, had engaged in sexual relationships with teenage students during his marriage.
One 16-year-old girl moved in to the family home within days of his wife's disappearance. The pair later married, but have since separated.
A podcast "The Teacher's Pet" brought global attention to the case in 2018.
Since May, more than 27 million people have listened to the podcast, which is produced by The Australian newspaper.
It has highlighted the bungled handling of the Dawson case by police in the early years after her disappearance, prompting an apology so many years later from the state's police commissioner.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)