The powerful blast took place at 10.30am, with police and firefighters swiftly rushed to the area.
The apartment was "completely blown up according to the information we have received," Hans Lippens, a police spokesperson, told regional newspaper Göteborgs-Posten (GP).
GP also quoted a witness who said the blast was so loud that she had experienced "hearing loss" in the immediate aftermath.
Police described the building as a "gruppboende", which is a type of sheltered accommodation for vulnerable members of society. However it was not immediately clear if anyone had been injured.
According to GP, a man, 25, who fled the scene was found by officers in a nearby forest and was arrested soon afterwards.
Lippens initially said that that the source of the blast was a mystery, but he later told the TT news wire that officers were investigating the possibility that a gas bottle had exploded.
The property remained sealed off on Monday afternoon while detectives continued their investigation.
Hisingen is Sweden's fourth largest island and is situated north west of Gothenburg city centre.
Some parts of the suburb have a reputation for gang violence; a shooting at a restaurant which left two people dead put eight others in hospital grabbed global headlines last year.