The cache, which included four Kalashnikov rifles and what is believed to be Semtex explosive, was discovered on Tuesday night in Coalisland, east Tyrone.
The suspect, aged 26, was detained in Renton, in Dunbartonshire, Scotland.
Mr Kerr, 25, was killed when a bomb exploded under his car in Omagh, Co Tyrone, on Saturday.
News of the breakthrough emerged after nationalist leaders joined police at the Catholic police officer’s funeral in the village of Beragh, Co Tyrone.
The murder has been blamed on dissident republicans opposed to the peace process and to Catholics joining the police.
Police Service of Northern Ireland (PSNI) assistant chief constable Drew Harris described the arms haul as one of the most significant for some time.
At a press conference in Belfast he said: “Detectives from Serious Crime Branch who are investigating Ronan’s murder have made a significant discovery of arms and munitions — one of the most significant in recent years... It was made in Coalisland last night.
“A man has been arrested in Dunbartonshire in Scotland in connection with the find of weapons at Coalisland... This 26-year-old suspect is being brought back to Northern Ireland for questioning.”
He said the arms find would form lines of inquiry into Ronan’s murder and dissident activity generally.
Chief Constable Harris said: “The seizure was made in a garage unit on the Mountjoy Road.
“Police officers uncovered a number of stolen vehicles and inside those vehicles a significant amount of arms and munitions.
“The haul included four rifles, ammunition, timer power units, detonators, incendiary bombs, components for rocket launchers and other explosive devices, and a quantity of explosives, possibly Semtex.”
Referring to Ronan Kerr’s funeral in Beragh, Chief Constable Harris said: “At one level, it was heartbreaking. My heart goes out to Ronan’s family.
“At another level, it was heartening to see so many ordinary, decent people from so many different walks of life come to pay their respects.
“Many of Ronan’s colleagues from the Police Service of Northern Ireland attended the funeral. But many others were unable to attend because they have been working round the clock on the investigation into his murder.”