US Immigration and Customs Enforcement officers arrested Mahmoud Bazzi at his home in the Detroit suburb of Dearborn, Michigan.
Spokeswoman Gillian Christensen said Mr Bazzi was held for "immigration violations", adding that the government "is committed to rooting out alleged human rights violators who seek a safe haven in the US".
Mr Bazzi has denied killing Irish peacekeepers Derek Smallhorne and Thomas Barrett, telling a Detroit newspaper he once falsely confessed because he feared a Lebanese militia would kill him unless he lied.
Irish defence secretary Simon Coveney welcomed Mr Bazzi's arrest and said his government had continually pursued the case.
Mr Coveney said: "I hope this is the start of a process to bring to justice the alleged perpetrator of what was a heinous crime, the torture and murder of two innocent Irish peacekeepers."
Relatives of the two men have waged a long campaign for justice and US authorities have previously investigated Mr Bazzi's alleged role.