The armed forces spokesman Brigadier General Amir Syarifuddin said the government is deciding whether to charge Budiman Sujatmiko, 27, with subversion. The crime is punishable by death.
Nine other people were arrested also, Syarifuddin said.
The government claims subversives were responsible for violence that erupted on July 27 after police raided the headquarters of an opposition party headed by pro-democracy leader Megawati Sukarnoputri.
Mr Budiman denied the allegations in a statement issued last week from hiding, saying they were an excuse to crack down on pro-democracy forces.
Opposition figures say that instead of being a leftist plot, the riots were fuelled by popular anger at poverty, corruption and official interference in Megawati's party.
Suharto overthrew her father, President Sukarno, in 1966, and apparently is afraid her growing following could undermine his regime.
Budiman was arrested late on Sunday with five other people, Syarifuddin said, including Petrus Haryanto, secretary general of Budiman's unauthorised Democratic People's Party, which has fewer than 200 members, mostly young people.
Four more people were arrested early on Monday, the general said.
Megawati, whose party is one of only three allowed under Suharto, was questioned by police on Friday and denied knowing anything about an alleged plot. She said she hadn't even heard of Budiman until after the riot.Reuse content