Sivasubramanian, who had been 'absconding' since the mishap, was arrested in Mettupalayam, about 45 km from here, police said adding they were interrogating him.
A portion of the over 15-foot high compound wall, damp due to heavy rains lashing the area for the past few days, came crashing down on the adjoining four tiled-roof houses in Nadur village, over 50 km from here, around 5 am on Monday, killing the 17 Dalits, including ten women and two children.
The arrest of the house owner, absconding since the incident, came amid demands by the locals and some Dalit outfits besides political leaders, including DMK president M K Stalin who alleged officials had failed to act on complaints about the stability of the wall.
Police said a case under Indian Penal Code section 304 A (causing death by negligence) had been registered against Sivasubramanian, who runs a textile showroom in Mettupalayam.
On Monday, the family members of the victims have demanded his arrest for constructing the wall, reportedly illegally, and initially refused to accept the bodies.
About 500 local people had staged a sit-in on the Mettupalayam-Ooty road while protests were also held at the Mettupalayam government hospital where the post-mortem of the bodies was conducted demanding the arrest of the owner.
Police had made a mild cane charge to disperse the crowd and around 25 people were arrested.
Bodies of the 16 victims were cremated at the village late Monday night with state Minister S P Velumani among others attending the funeral while the body of another person was taken to his nearby native village.
Stalin on Tuesday visited the kin of the victims at Nadur village and consoled them.
Later speaking to reporters, he claimed despite complaints from the villagers about the stability of the wall, the district collector and officials failed to take action, resulting in the incident, he said.
Condemning the police action against the crowd at the hospital, Stalin said strict action should be taken against those responsible for the "brutal attack" on the villagers.
He also sought increase in the solatium of Rs four lakh announced by Chief Minister K Palaniswami and government jobs to the members of families.
Meanwhile, nearly 80 members of various organisations were arrested here for attempting to stage a protest seeking the release of 25 people detained on Monday, police said.