The special investigation squad arrested Surendra Pal on Tuesday night for hacking a Nigerian Obodo Uzoma Simeon to death along with others in Parra village, last week.
Pal was arrested from Chapora, a beachside village in north Goa.
Chief Minister Manohar Parrikar had claimed the murder as a drug related crime.
Simeon was found dead with stab injuries last week. His murder has led to protests by Nigerians who had blocked the national highway, creating ruckus.