A Malaysian Anti-Corruption Commission (MACC) source said that Najib was brought out of his residence at 3.07 pm by MACC personnel.
1MDB is being investigated in at least six countries for alleged money laundering and graft.
Malaysia's former prime minister Najib Razak arrives to give a statement to the Malaysian Anti-Corruption Commission (MACC) in Putrajaya, Malaysia, May 24, 2018. Najib has previously denied any wrongdoing and has said he believed the suspicious funds transferred into his account were a donation from the Saudi royal family. Most recently, his stepson Riza Aziz was also called into the MACC's headquarters today for questioning relating to the scandal.
Najib's arrest was in relation to a probe into SRC International, a former 1MDB unit, a task force investigating the fund said on Tuesday.
Najib's arrest comes almost two months after his coalition's shocking defeat in a May 9 general election.
Riza, who is Rosmah Mansor's son from her first marriage was in the centre of controversy when he was implicated by the US Department of Justice for allegedly siphoning hundreds of millions of ringgit to fund the steamy Hollywood movie The Wolf of Wall Street and two other films.
Riza is the co-founder of Red Granite Pictures, a company that US prosecutors say financed three Hollywood films, including the 2013 Martin Scorsese movie "The Wolf of Wall Street", with funds misappropriated by 1MDB.
The civil suit against Red Granite was part of an effort to recover some of the $4.5 billion that USA prosecutors say was stolen from 1MDB.
Last week, the 1MDB taskforce team froze over 900 accounts including Central Umno and Umno Selangor, to facilitate investigation over allegation that the accounts received funds from 1MDB.