The 27-year-old man has been held on suspicion of complicity to commit murder after being interrogated over the weekend, local newspaper Sydsvenskan reports.
Police have so far interviewed a total of 30 people in connection with the crime.
The 23-year-old victim was shot several times at around 7pm on Friday while sitting in a car on Munkhättegatan in Malmö.
The gunman fled the scene in the car in which the victim was sitting. The car was later found in the nearby town of Svedala on Saturday.
The dead man was previously known to the police and has been identified as one of the leading figures in a gang war which has been ongoing in the southern Swedish city for the past year.