In July, Leicestershire Police reopened the case into Clifford John Clarke's death, stating advances in forensic science had led to new leads.
Mr Clarke was found stabbed to death in his flat on High Street East, Uppingham, in September 2000.
A police spokesperson said the 27-year-old woman was arrested on Tuesday and was currently in police custody.
Detectives said that shortly after Mr Clarke's death they found three pieces of evidence which they believed were significant to the inquiry.
A small vegetable knife with 'Made in Japan' on the blade and some keys on a chain were found in a drain about a quarter of a mile from Mr Clarke's home, and a shoe print was found in his flat.
Det Ch Insp Neil Castle said: "Even though we have someone arrested, our inquiries aren't over and I would still urge anyone who can help to call police or Crimestoppers.
"Although it has been 12 years since the murder, the results from our appeal have proved that there are people out there that can help us and that it isn't too late to call."
A Â£5,000 reward has been offered by charity Crimestoppers for information which helps catch and convict the murderer.
A woman has been arrested over the murder of a Rutland man 12 years ago.