The arrest came as authorities pursued a crackdown on the Brotherhood, the party of ousted president Mohamed Morsi, which has sparked deadly protests and international condemnation.
Badie was arrested in an apartment near Rabaa al-Adawiya square, where more than 200 Morsi supporters were killed on Wednesday as police cleared their protest camp, the interior ministry said, according to state television.
Both public and private television channels showed pictures of Badie, 70, being escorted away by police.
Senior members of the Muslim Brotherhood organisation, including Badie, are wanted for questioning, accused of inciting the deaths of protesters.
Prosecutors have set an August 25 date for the trial of six top Brotherhood leaders for “incitement to murder.”
The arrest came days after Badie’s son was killed in protests against Morsi’s ouster.
Egypt’s interior ministry has said it has arrested more than 1,000 Muslim Brotherhood “elements” during the unrest.
Morsi was deposed by the military on July 3 in what his supporters call a coup.
His opponents say the military had no choice but to intervene after the start of another popular uprising like the one that overthrew president Hosni Mubarak in 2011.
According to an AFP tally, more than 1,000 people have been killed since mass demonstrations against the deposed president at the end of June.