The veteran campaigner was led away by police shortly after unfolding a poster that said President Vladimir "Putin fails to act against Chechnya torture of gay people" near Red Square in central Moscow.
"There can be no normal sporting relations with an abnormal regime like that of Vladimir Putin," he said before being approached by three officers.
After a brief discussion about the legality of the protest, the 66-year-old was escorted to a police car next to the walls of the Kremlin.
He was held at the central Kitai-Gorod police station and released two hours later, he told AFP.
Officers ordered Tatchell to appear in court on June 26, the activist said, but added he planned to leave the country before the hearing.
In 2007, Tatchell was beaten by rightwing demonstrators as he attended Moscow's second-ever gay pride parade, in an attack he says has left him with brain damage.
Tatchell said the law had been used to criminalise peaceful protests, sack teachers and suppress organisations that offer support to the LGBT community, in a written statement released to the media.
Russian authorities have insisted lesbian and gay fans should feel safe travelling to the country for the World Cup, but some LGBT supporters told AFP they had received violent threats ahead of the tournament.
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