Police said Alan Priest, 34, the natural father of Jade Matthews, nine, of Bootle in Merseyside, was being held as part of routine investigations into her killing.
They were also anxious to speak to three young boys seen on the railway line where Jade was discovered with serious head injuries early yesterday.
Dozens of people turned out to search for the missing girl as the case reignited painful memories in the community of the killing of toddler Jamie Bulger by two 10-year-olds in 1993.
Jade Matthews, an only child, left her home in Eaton Avenue, Bootle, at 4pm on Sunday to go out to play.
Her mother Denise, 31, and stepfather Stephen, 37, became worried when she had not returned by 7.30pm. They tried to find her, and finally raised the alarm with police at 9pm.
Early yesterday, a police dog handler discovered Jade's body laying alongside a rarely-used goods rail track one and a half miles away.
She was still wearing the pink sweatshirt, blue jeans and white Reebok trainers she had on when she left home.
Detective Superintendent Geoff MacDonald, who was involved in the Bulger inquiry, said three boys were seen by a passer-by on the railway track at about 8pm on Sunday.
Mr MacDonald stressed they would not be in trouble for trespassing on the line, but said: "We are most anxious to trace those children and would ask them to come forward."
He was keeping an "open mind" about whether children could have been involved in Jade Matthews' death.
Mr MacDonald said her severe facial injuries appeared likely to have been caused by a blunt instrument. It was too early to say whether or not she had been sexually assaulted.
Forensic experts were examining a number of bloodstained items found at the scene, including a plank of wood.
Neighbours said Jade was a "little angel". Tommy Clube, 61, said: "Jade was a very pleasant well-mannered little girl."
Bob Branch, head teacher at Jade's school, Orrell Primary, said the mood among pupils was very sad. "We are just trying to cope as best we can."
Two-year-old Jamie Bulger died three years ago after he left his mother's side in Bootle's Strand shopping centre with two boys, Robert Thompson and Jon Venables, both aged 10.
They dragged Jamie two and a half miles to a stretch of railway track, where he was then hit with bricks and a heavy metal bar and punched, kicked and stamped upon.
Thompson and Venables were both found guilty of murder and ordered to be detained at Her Majesty's Pleasure.Reuse content