Malaysian Anti-Corruption Commission (MACC) sources confirmed the arrest. "Wait for our statement," the source said.
Najib will be charged in court on Wednesday morning, following his arrest on Tuesday (July 3).
MACC said that Najib will be taken to the Kuala Lumpur Court Complex to face charges at 8.30am.
The MACC, however, did not specify the charges he will face.
"The 1Malaysia Development Board (1MDB) taskforce has confirmed that the arrest against Najib at 2.35pm today is related to the SRC International Sdn Bhd investigations," said the MACC in a statement.
The arrest was made at Najib's residence at Jalan Langgak Duta, Kuala Lumpur.
It is learnt that Najib is being taken to the MACC headquarters now and his family lawyers said he could be charged tomorrow (July 4).
At a book launch event earlier, MACC chief commissioner Shukri Abdull was asked when Najib would be charged.
However, he just chuckled and said, "I believe you have to ask the Attorney General about that".