Police Scotland said the 34-year-old victim suffered burns on his lower body in the Tower Court area of Nairn at 22:44 on Tuesday.
He was taken to Raigmore Hospital in Inverness before being transferred to a specialist burns unit at St John's Hospital in Livingston.
The injured man has been named locally as James Shaw.
A police spokesman said: "As part of ongoing enquiries into a reported serious assault in Nairn where a 34-year-old man received burns to his lower body, Police Scotland can confirm that a man in his 20s is currently in custody in connection with the incident.
"The injured man remains at St John's Hospital in Livingston where he is reported to be in a stable condition.
"High visibility patrols continue to be carried out in the Nairn area to provide reassurance to members of the public."
A man in his 20s has been taken into custody after a homeless man was found severely burned in Nairn.