The 20-year-old man was taken into custody after police raided his home in Staffordshire.
He is being held on suspicion of breaching the Computer Misuse Act offences and he is currently in police custody.
Scotland Yard said a search of his address in still ongoing and investigations are continuing.
The data hacked in the TalkTalk cyber attack 'is significantly less than suspected' with fewer than 21,000 bank details accessed, the company has said.