Antonio Bagnato is believed by Thai police to have killed former Hells Angels member Wayne Schneider.
A US man has also been arrested in Thailand in connection to the biker's death.
Wayne Schneider was one of New South Wales' 10-most-wanted fugitives in 2006.
The 37-year-old was abducted from his home by five masked men in the Thai beachside town of Pattaya early on Monday, Thai authorities said.
His body was later found in a 2m (6ft) deep grave in the jungle.
Cambodian and Thai officials say that Mr Bagnato, who is also Australian, has been caught in Phnom Penh.
The 27-year-old is said by Thai media to have had ties with Wayne Schneider back in Sydney. The Bangkok Post said they had owned a fitness business together, and Mr Bagnato was also involved in a bike gang.
A 21-year-old man from the US has also been arrested. He has been charged with kidnap and murder, AFP news agency said.
Thai authorities are still looking for other suspects.
The case has drawn attention in Australia where Wayne Schneider had a long criminal history.
He was on New South Wales' most wanted list for shooting a bouncer in the kneecap outside a Sydney nightclub, though the charges were later dropped, according to the Australian Broadcasting Corporation.
He also faced drug offence charges and was said to be a senior member of the Hells Angels motorcycle gang.
The prime suspect in the killing of an Australian biker in Thailand has been arrested in neighbouring Cambodia, authorities say.