The 30-year-old man was transferred from Silverwater jail to Burwood police station on Thursday and is expected to be charged with the murder of Ferenc "David" Stemler.
The arrest followed a public appeal on Monday for help in tracking down all of those responsible for the July 27 killing at Canterbury, in Sydney's inner southwest.
Mr Stemler died at the scene in the early hours of the morning from multiple gunshot wounds in an attack police said had all the hallmarks of an underworld hit.
He was captured on CCTV approaching a white Commodore outside his address on Broughton St before he was fatally shot.
Detectives believe the meeting was pre-arranged.
Police allege the man arrested on Thursday was inside the Commodore at the time Mr Stemler approached the car.
Two people - a 23-year-old woman and a 27-year-old man - were previously charged over the murder and remain before the courts.
Both the Commodore and a white Lexus that police believe was used in the shooting were stolen before the shooting.
Mr Stemler was the fifth person to be shot on a Sydney street in as many days.
The shootings prompted NSW Police to set up Task Force Magnus to examine the series of killings, which were believed to be linked to organised crime networks feuding over the city's lucrative illicit drug trade.
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