The 51-year-old was arrested at Mordialloc Railway Station about 1.45pm today after reports of three grass fires at nearby parks.
Police are investigating whether the fires are linked to the blaze at the racecourse about 6.25am, which engulfed the Norman Robinson Stand.
Police are treating all four fires as suspicious.
The man, whose last known address was in Wangaratta, is currently being questioned as police urge anyone with information, CCTV or dashcam footage to contact them.
More than 65 firefighters had rushed to the racetrack to extinguish the fire, which sent up smoke over the area.
“There’s a fair bit of timber there, so that probably helped it burn pretty well,” Fire Rescue Victoria’s Assistant Chief Fire Officer Dennis Smith told reporters earlier today.
“This had a lot of potential to extend and be a much more significant fire and and really impact the racecourse.
“Thankfully, with their quick work and also some really good work from the internal fire systems, they were able to stop that from spreading to the adjoining grandstands.”
The Norman Robinson Stand and 1876 bar were both significantly damaged by the fire.
No members of the community were injured in the blaze, however a firefighter required stitches to his hand.
Melbourne Racing Club chairman John Kanga said he was “gutted” about the fire.
“It’s a heritage-listed stand, it’s a very old stand and a unique stand and one of the favourite stands for all of our members, so we’re gutted as a club, but we’re keen to rebuild.
Kanga said contingency plans were in place for a race scheduled tomorrow, which would likely be moved to Mornington racetrack.