The suspect had been a supporter of former East chief minister Sivanesathurai Chandrakanthan alias Pillayan before joining the Army.
A Muslim, he has been serving at the military intelligence camp at Giritale.
His connection to the gunning down of Pararajasingham at a Christmas mass in 2005 in Batticaloa came to light during interrogation of four other suspects already in remand custody.
Despite the Mahanama Tilakaratne commission appointed by the then government submitted a report, no proper investigation had taken place into the killing.
Now, a CID team is conducting investigations on an order by the president and the prime minister.