The 25-year-old, identified only as Tobias P., was arrested in the centre of the city in the early hours of Saturday – shortly after two high-value cars were set on fire in nearby streets, according to the city's daily Tagesspiegel.
The man was arrested at the end of 2009, and a Left-wing housing project in Liebigstraße, where he was registered, was searched.
His five-week stay in investigative custody provoked a campaign to release him, supported by a number of Left-wing groups in the city. He was released due to a lack of evidence.
The police say they are now trying to establish whether he was responsible for a series of arson attacks on cars. More than 500 cars have been burned or damaged in the attacks in the city since the start of the year.
Many of those targeted are expensive models, although some are very ordinary. It is thought that some attacks might be conducted by Left-wing groups and individuals opposed to the gentrification of certain areas of the city.
There also appears to be a copy-cat factor while some incidents are thought to be insurance fraud attempts.