Rory Martin McCarthy, 45, was the subject of an international arrest warrant and was arrested at a four-star hotel in the Uruguayan capital, Montevideo.
“We’re expecting Spanish police officers to fly here in the next few days to collect him and take him back to Europe,” said a spokesman for Interpol in Montevideo.
Last week, detectives detained Cork-born suspect John Gerard Dorgan, 52, in the holiday resort of Fuengirola, Malaga, in connection with the attempted murder three months ago of 58-year-old Peter Christley.
He has been remanded in custody by an investigating magistrate now placed in charge of the inquiry.
Christley was blasted four times at point blank range by a gunman when he answered the door of his home near the resort of Benalmadena, at 9pm, on January 27. Christley, who had been renting the house for six years, spent several weeks in an intensive care ward but has recovered.
He was the second Brit in a month to survive a home shooting in the area, known as the Costa del Crime.
Thomas Farrell, 54, was blasted in the face at close-range at his villa in nearby Mijas Costa, on January 3.
Last June, British fugitive Daniel Smith, 24, was shot dead outside a bar in Riviera del Sol, near Mijas.
Irishman Eric Wilson, 27, was arrested for the murder and faces up to 25 years in prison if convicted.
The following month, Irish holidaymaker John O’Neill, 41, a father- of-two, was shot dead following a row at a pub in Benalmadena.
Police are hunting Darren O’Flaherty, 35, from Liverpool, as the prime suspect in O’Neill’s death.