Renaud Donnedieu de Vabres, 57, culture minister between 2004 and 2007, was serving as a senior advisor to then defence minister Francois Leotard in 1994 when a suspect contract to sell French submarines to Pakistan was signed.
The contract has since become the focus of a graft probe, amid allegations that kickbacks from the deal were used to fund Edouard Balladur's failed 1995 presidential campaign, for which Sarkozy acted as spokesman.
There have also been claims that a 2002 bombing in Karachi that killed 11 French naval engineers was carried out by Pakistani agents in revenge for the cancellation of bribes secretly promised to officials.
Sarkozy has denied any knowledge of illegal contributions to Balladur's campaign, but the long-running investigation has tainted his preparations to stand for re-election next year with scandal.
Police sources told AFP that de Vabres had been remanded in custody overnight and was due to be questioned on Wednesday by the investigating magistrates probing the "Karachi Affair".
Three more people have already been charged with graft in the investigation: alleged middleman Franco-Lebanese businessman Ziad Takieddine and two former close political aides to Sarkozy.