The bomb was left in a holdall in Exchange Street West where it exploded shortly before 7pm on Friday, December 13, when the area was packed with Christmas revellers.
The suspect was arrested in north Belfast this morning during a planned operation.
He has been taken to the Serious Crime Suite at Antrim police station for questioning.
A warning had been given about a device but it was left at a different location to that named in a call to a newspaper.
Police were clearing people from several premises when the device exploded. Approximately 1,000 people were affected.
Detectives are continuing to appeal for anyone with information about the identity of a man on a bicycle in Talbot Street and in St Anne’s Square who they believe to be the person who left the holdall containing the bomb in Exchange Street West.
He was wearing a black hoody and carrying a black Slazenger holdall.
Anyone with information is asked to contact detectives at 028 9180 1507.
Alternatively, information can be provided anonymously to the independent charity Crimestoppers on 0800 555 111.