Ghaleb Taleb was arrested in Athens and will be deported for illegal entry into the country following questioning by police, the source told Agence France Presse.
Taleb was said by Italian daily Corriere della Sera on Saturday to be a member of Fatah al-Islam.
The daily said he had secretly arrived in Greece months ago and was planning attacks in Europe.
Another alleged Fatah al-Islam militant cited in the report, Mohammed Musa, has been in Greek police custody for months and will also be deported for illegal entry, the police source said.
It was not immediately clear if the detained were to be deported to territories controlled by the Palestinian Authority or to Lebanon.
The Lebanese army battled an uprising by Fatah al-Islam in the northern Palestinian refugee camp of Nahr al-Bared in the summer of 2007. The fighting killed some 400 people, including 168 soldiers.
The group is also accused of being behind twin bus bombings in Ain Alaq, a suburb northeast of Beirut which left three dead and close to 20 wounded in 2007.(AFP-Naharnet)
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