The 30-year-old was arrested by police hunting the robbers who struck last December. Earlier, two men from Kilcoo, Co Down were held as part of the same inquiry.
All three have been taken to Antrim police station to be interviewed.
Building contractor Dominic McEvoy, 23, and Peter Morgan, a 24-year-old plasterer and part-time farmer, were held after police swooped on their homes in Kilcoo.
Their families and Sinn Féin representatives were outraged by the arrests.
With Chief Constable Sir Hugh Orde publicly blaming the IRA for the robbery, McEvoy’s mother strenuously denied he had any involvement with the Provisionals.
She said: “We are a republican family and we have our beliefs, but he wouldn’t be as political as us. Absolutely not.”
The 42-year-old care assistant said she first thought it was a prank when police arrived. “Dominic burst out laughing, we all did. But then when I saw all the policemen in the house I knew it wasn’t a joke. The house just seemed to be invaded by them.”
The three men can be held for up to 14 days under anti-terrorism legislation, police said. Officers moved in on Kilcoo, a tiny village near Castlewellan, just before midnight on Wednesday. Computers, discs, a passport, credit cards, bank statements, phone records and wage cheques belonging to McEvoy were all seized.
Although police left just after 7am, six Land Rovers returned later to carry out new searches at the rear of the modest semi-detached property on Mullandra Park where he lives with his mother, step-father and two younger sisters.
Officers wearing dust masks used pick-axes to examine paving around a garden shed.
Relatives of Morgan, who lives just a few hundred yards away at Kirk Lane, were equally incensed.
Kilcoo is close to the area where a bank official’s wife was held hostage as part of the audacious operation just before Christmas.
Cash seized in County Cork last February was linked to the raid, but virtually all of the missing millions are unrecovered.
Even though senior IRA men in Belfast were suspected of heavy involvement in the raid, detectives do not have enough evidence to charge them.
According to security sources in Belfast, there is a firm belief that the inquiry team could, at some stage, bring to trial at least some members of the 30-man gang who played a peripheral role. Last March the Northern was forced to replace all its £10, £20, £50 and £100 notes with new notes carrying a different logo. The Provisionals have always denied any involvement in the raid.
Even though the organisation has disarmed and officially ended its campaign of terror, security chiefs insisted the move by the IRA to call a halt would not influence any decision to charge anyone in connection with the robbery.
About £60,000 in used Northern Bank notes recovered in Cork last February as part of an investigation into IRA money-laundering has been linked to December’s raid.
Gerry Adams, the Sinn Féin President, refused to be discuss any potential implications the arrests could have for the peace process.
Questioned in Dublin, he was asked if he still believed the IRA did not carry out the Northern Bank robbery. “I’m not going to get into all of that,” he said.
But his party’s Assembly member for South Down, Willie Clarke, hit out at the way the arrests were handled. “These families are being targeted for no other reason than they have republican sympathies.”