Hamza Kashgari posted a controversial tweet on the prophet’s birthday last week that sparked more than 30,000 responses and several death threats.
He was held on arriving at the Kuala Lumpur International Airport on Thursday, following a request from Interpol, officials said on Friday.
It is unclear if the newspaper columnist will be extradited.
The 23-year-old tweeted on Saturday: “I have loved things about you and I have hated things about you and there is a lot I don’t understand about you. I will not pray for you”, the AFP news agency reported.
He has apologised for his remarks and removed the offending tweets, but that did not stem the outrage. Clerics have called for him to be charged in court.
Muslim-majority Malaysia does not have a formal extradition treaty with Saudi Arabia.
However, an official who did not wish to be named told the AFP news agency that Mr Kashgari could be extradited under other bilateral security agreements.