Francisco Jose Garzon Amo, 52, who is under armed guard in hospital, is to be questioned over suspected reckless driving following the devastating crash which left 78 people dead and almost 170 injured.
Investigators are looking into possible failings by the driver after the Madrid to Ferrol service derailed on Wednesday night as it approached the city of Santiago de Compostela.
Authorities have located the train’s so-called “black box” which is expected to shed further light on the disaster’s cause.
A Spanish police spokesman confirmed the driver had refused to answer questions and he is now expected to questioned by a judge.
Jaime Iglesias, police chief of Spain’s northwest Galicia region, said Amo would be questioned “as a suspect for a crime linked to the cause of the accident” and described the alleged offence as “recklessness”.
Police said the number of dead, thought on Thursday to be 80, has been reduced to 78 as forensic science units continue to identify remains.
A spokesman for Spain’s National Police said that Amo was arrested in hospital on Thursday at 8pm on suspicion of causing the accident.
Some 72 of those killed in the catastrophe have now been formally identified, while DNA results for the remaining six are expected in the coming days.
The revised death toll came as forensic scientists matched body parts with each other at a makeshift morgue set up in a sports arena.
One Briton has been confirmed by the Foreign Office to be among the 168 injured passengers, while 32 people are still believed to be in a critical condition.
Early indications suggested the train was travelling at around 118mph – more than twice the 50mph speed limit – when it crashed while heading into a curve.
Gonzalo Ferre, president of the rail infrastructure company Adif, said the driver should have started slowing the train four kilometres (2.5 miles) before reaching a dangerous bend that train drivers had been told to respect.
“Four kilometres before the accident happened he already had warnings that he had to begin slowing his speed, because as soon as he exits the tunnel he needs to be travelling at 80 kilometres per hour,” Mr Ferre said.
A probe is also looking into whether the Alvia 730 series train’s in-built speed regulation systems failed.
Nationals from the United States, Mexico and Algeria are believed to be among the dead. One US woman killed in the wreck has been named as Ana Maria Cordoba, an employee of a diocese near Washington DC.
According to reports in the Spanish media, after realising the magnitude of the disaster Amo said: “I f***** up, I want to die.”
In March 2012, the 30-year employee of Spanish train operator Renfe allegedly posted boasts on Facebook about how fast he was driving a train and joked about racing past police.
He is believed to have taken control of the train from a second driver about 65 miles south of Santiago de Compostela.
Spanish prime minister Mariano Rajoy, who was born in the city, visited the crash scene yesterday and declared three days of national mourning.
American Stephen Ward, an 18-year-old Mormon missionary who was on the train, told the Associated Press: “Everyone was covered in blood. There was smoke coming up off the train.
“There was a lot of crying, a lot of screaming. There were plenty of dead bodies. It was quite gruesome.”