The man has not been named by Swedish media but is understood to be 23 years old and from a country outside of Europe.
He was arrested and detained on Tuesday, according to Swedish tabloid Aftonbladet, which broke the story on Wednesday evening.
According to the newspaper, the suspect later appeared at Attunda District Court, north of Stockholm. The allegations against him centre around recruiting members of a terror group in Germany during the course of this year, Aftonbladet reported.
The man had a European arrest warrant against him at the time of his arrest and it is understood that Sweden will send him back to Germany for further questioning.
His lawyer Jonas Tham told Swedish media on Wednesday that his client denied being involved in any criminal activities.
The prosecutor's press office has not released any further information, citing the need to maintain confidentiality.
SEE ALSO: Swedish police hold terror suspect wanted in Germany
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