Dozens of people in paramilitary-style uniform attended Peggy O'Hara's funeral in the city in July.  Her son was an INLA member who died on hunger strike.
Police said a 53-year-old man was arrested in the city on Saturday.
A number of other people have been questioned as part of the police investigation.
Mrs O'Hara's son, Patsy, was one of 10 republican prisoners who died on hunger strike in the Maze Prison in 1981.
He was a senior member of the Irish National Liberation Army (INLA) - a republican paramilitary group believed to have been responsible for more than 120 murders from its formation in 1975 until its ceasefire in 1998.
A man has been arrested by police in Londonderry investigating paramilitary displays during the wake and funeral of a veteran republican.