Darshan, 47, was detained from his farmhouse in Mysore this morning and taken by the police to Bengaluru.
The case involves the murder of 33-year-old Renuka Swamy, whose body was found in Bengaluru on June 9. Mr Swamy, who worked for a pharmacy company, had allegedly posted "obscene messages" on social media on Pavithra Gowda, Darshan's co-star and close friend.
Pavithra Gowda was also arrested and questioned on the murder, officials said.
Mr Swamy was from Chitradurga, over 200 km from Karnataka's capital.
"The 33-year-old man, who has been murdered, has been identified as Renuka Swamy. At first glance, it seems that the deceased had sent objectionable messages to Darshan's girlfriend," said B Dayanand, Bengaluru police chief.
The police were alerted to the murder by residents who reportedly saw stray dogs dragging a body out of a drain. The body had marks of injuries. Investigations led to the arrest of some suspects who allegedly directed the police to Darshan.
"The police have detained several people in this case. During interrogation, they revealed Darshan's name. After this, the police took him into custody for investigation," said Karnataka Home Minister G Parameshwara.
Darshan, dubbed "Challenging Star" by his fans, was picked up by the police from a film shoot in Mysuru this morning.
The police are inquiring into whether Darshan was directly involved in the murder or was part of the plot. Nine others have been arrested in the case.
Police have provided tight security at Darshan's RR Nagar residence in Bengaluru.
The actor, who debuted as lead in 2002 film "Majestic", is known for his roles in films like Anatharu (2007), Krantiveera Sangolli Rayanna (2012) and Kaatera (2023).
He is not new to controversies. About a decade ago, he spent several nights in jail over allegations of domestic abuse.
Renuka Swamy's family was distraught. "He was my only son. He got married last year. I spoke to him just on Saturday. I want justice," his father Srinivasaiah said.