The worker, named as 38-year-old Ms Sirisini or Ann Sriya by police, has been accused of using a lighter to set fire to a piece of paper before throwing it on to a fuel container at the Prapakorn Oil warehouse in Thailand.
The fire, which caused more than 40 million Thai baht (about £900,000) worth of damage, quickly spread through the building, used to store thousands of litres of oil tanks.
Images shared on social media showed a fireball and thick black smoke billowing into the air above the single-storey warehouse in Nakhon Pathom province.
CCTV footage, allegedly of Ms Sriya, shows a person walking into a warehouse with a piece of paper in their hand before disappearing behind a row of containers on a shelving unit.
Flames can then be seen coming from a two locations behind the containers before the person reappears, still carrying the paper.
Provincial Lieutenant General Thanayut Wuttijarathamron said Ms Sriya was arrested at her home in Sam Phran district and allegedly later confessed to committing the arson.
The disgruntled employee, who was found injured during the incident on 29 November, allegedly told police she started the fire in anger at her boss who had scolded her and discussed ways she could improve her work.
It was the second time a fire had started at the factory in recent months, according to Major General Chomchawin Purthananon.
“The woman has been working for Prapakorn Oil for nine years,” the MailOnline reported him as saying.
“She said her employer complained to her and caused her stress every day, and she did not expect the fire she started to cause this level of damage.”
More than 40 fire engines spent four hours battling the blaze before it was eventually brought under control, according to the MailOnline.
A specialist environmental protection operation unit was also sent to the area to monitor the quality of the water in Khlong Om Yai canal, which runs beside the warehouse, the Bangkok Post reported.
Ms Sriya remains in custody while police continue their inquiries.