The 25-year-old is being held overnight in police custody and is due to appear today at the sheriff court in Kilmarnock, the East Ayrshire town where the remains of 19-year-old Hazel North were found.
The discovery of the body, in a sloped area close to the busy B7038 road, was made in Dean Park, 60 miles from her home in Dunfermline, Fife.
Ms North had last spoken to her sister on March 4, telling her she was planning to visit Kilmarnock. A search was launched after she was reported missing on Friday.
Inquiries had centred on a property in the town's Northcraig Road before the focus shifted to the southern end of the nearby park. Police later confirmed that they believed the remains found there belonged to the missing teenager.
The grim discovery came as it emerged Ms North had spoken of her happiness and zest for life in a series of recent posts on her Facebook page.
In January, she wrote on the social networking site that she loved life, that "everything was turning out for the best" and that she thought 2014 was going to be the "best yet".
In a series of further optimistic updates, she added that she had "got everything I want and need", and that she hadn't been so happy "in a long time".
Her devastated family was yesterday receiving support from police liaison officers, as white-suited forensic teams continued to sift through potential evidence close to the road, which is one of the main routes in and out of the town.
Several entrances to the park were closed off, and bags of soil were removed from two forensic tents throughout the afternoon on the site. Police officers have described the investigation as "complex" due to its location.
On Friday, the focus of the police search was on a semi-detached property in Northcraig Road, a few hundred yards away from where Ms North was found.
Although nothing suspicious was found in the home, police returned to the address yesterday afternoon.
John Miller, 24, and Claire Massey, 22, who live next door to the property, said they had not seen Ms North before.
"It's a shock," Mr Miller said. "It's not something you expect to happen right on your doorstep."
Ms Massey added: "The whole thing is tragic. We've had CID round showing us a picture of the lassie but we've never seen her."
A resident whose property overlooked the scene of the grim discovery said the first tent had been erected on Sunday night and another had appeared yesterday morning.
After hearing that a body had been discovered, she said: "It's not much consolation, but at least the family know now. It's really sad."
A post-mortem examination is due to be carried out on Ms North's body at the Southern General Hospital in Glasgow later today.
Speaking before the arrest, Chief Superintendent Gillian MacDonald, from Police Scotland's Ayrshire division, said his officers had information that Ms North had been living in Kilmarnock recently.
"Officers have carried out a detailed search and excavation of an area within Dean Park and the body of a young woman has been found. We believe this to be Hazel North," she added.
"A full forensic examination of the site remains ongoing and a post-mortem examination will take place to establish the exact cause of death."
Ms North's brother, Michael North, had previously appealed for help in finding his younger sister, saying he wanted her back with "the family who love her loads".
Officers had also been investigating a possible sighting of Ms North with another woman on March 18 in Stranraer, Dumfries and Galloway, where she used to live.
A Police Scotland statement said: "We can confirm that a 25-year-old man has been arrested and is presently detained in police custody in connection with her death.
"A report will be submitted to the procurator-fiscal."