Oseney da Costa de Oliveira, also known as "Dos Santos", 41, was under temporary arrest on suspicion he was involved in the case with his brother Amarildo da Costa de Oliveira, who was arrested last week, the federal police said.
Amarildo, known as "Pelado", was arrested last week in the riverside village of Sao Gabriel where the two men were last seen on June 5.
Police returned there on Tuesday and seized some ammunition and an oar, the statement said. Both suspects are being held at the police station in Atalaia do Norte, the nearest town, where the second man was arrested.
Speaking of Oseney, Alex Perez, a police investigator, told reporters: "He did not resist arrest on suspicion of homicide based on witness accounts that placed the two suspects at the supposed scene of the crime."
The search for Phillips and Pereira is nearing the end as the area left to search has kept shrinking, according to a spokesman for indigenous group Univaja, which has been searching non-stop for the men.
Eliesio Marubo, a lawyer for Univaja, said indigenous searchers tipped off the authorities after discovering traces of the men in the area, helping to focus the search.
"We understand that we are heading toward the end. The search area has been further reduced," Marubo said late on Monday.
Pereira, a former head of isolated and recently contacted tribes at the government's indigenous affairs agency Funai, was travelling on a research trip with Phillips, a freelance reporter who has written for the Guardian and the Washington Post and was working on a book on the Amazon.
They were in the remote jungle area near the border with Colombia and Peru that is home to the world's largest number of uncontacted Indigenous people.
The region has lured cocaine-smuggling gangs, along with illegal loggers, miners and hunters.
On Sunday, police said searchers had found belongings of the two men in a creek off the river near where they were last seen on June 5.
The belongings included an ID card for Pereira. A firefighter on a search team told reporters of a backpack with clothes and a laptop that was tied to a half-sunken tree trunk.
In a letter to the Phillips family, which was reviewed by Reuters, the Brazilian ambassador in London apologised on Tuesday for passing on incorrect information that bodies had been discovered.
Information received from investigating officials in Brazil misled the embassy, ambassador Fred Arruda wrote.
Brazilian federal police said they expect to conclude this week the forensic analysis of a blood sample collected from the first suspect's boat.
News of the pair's disappearance echoed globally, with human rights organisations, environmentalists and free-press advocates urging Brazilian President Jair Bolsonaro to step up the search.
