A 58-year-old man identified as Erhan G. was arrested in Berlin on Monday on suspicion of dealing in the stolen goods.
Prosecutors said he has “given a broad confession” in the case and provided information about stolen personal items from Lennon that remain undiscovered.
Police had on Tuesday announced the recovery of around 100 items, including diaries, a cigarette case and two pairs of Lennon's trademark round spectacles.
One of the three diaries from the haul contains an entry penned by Lennon on December 8, 1980 — hours before he was shot dead by a disturbed fan outside his Manhattan apartment building.
But numerous items are still missing.
“Among those we are looking for are a sculpture, walking sticks as well as several personal recordings and other writings,” said prosecutors in a statement.
The objects were allegedly stolen by the driver of Lennon's widow Yoko Ono from her New York home in 2006. They were discovered this year at a bankrupt Berlin auction house.
The driver, Koral Karsan, lives in Turkey and is out of reach of German law enforcement.
The former chauffeur worked for Ono from 1995 to 2006. He already spent 60 days in jail in 2007 in the United States for trying to blackmail Ono.
Along with co-Beatle Paul McCartney, Lennon wrote some of the Fab Four's biggest hits including “Help” and “With a Little Help from My Friends”, before the band split in 1970.
His possessions have since become collectors' items.
A leather jacket supposedly worn by Lennon sold for £10,400 (€11,700) at an auction in England in February.