Police, who had been looking for the suspect, 22-year-old Jaber Albakr since he went missing, warned those who might come into contact with him, that he could be dangerous.
“Tired but overjoyed: we captured the terror suspect last night in Leipzig,” Saxony state police tweeted after the arrest.
Several hundred grammes of explosives were found in the suspect’s apartment during Saturday’s raid.
“The overall picture of the investigation, in particular the amount of the explosives found, suggests that the person was planning to carry out an Islamist-motivated attack,” a spokesman for the Federal Prosecutor’s Office told broadcaster SWR.
Albakr was an officially recognised refugee from Syria, police said at the weekend.
The planned attack affirms the view of the Alternative for Germany (AfD) party that Chancellor Angela Merkel’s open-door migration policy is becoming increasingly problematic from a security perpective.
Merkel has yet to say whether she will seek a fourth term as chancellor in elections next year.