Ayman Nur, founder of the al-Ghad, or Tomorrow Party, was taken into custody on Saturday after the Egyptian parliament stripped him of his parliamentary immunity.
Lawmakers approved a request by the justice minister for Nur's parliamentary immunity to be lifted so he could be detained.
Nur denies the forgery accusations.
His arrest came two days before the ruling National Democratic Party was due to meet with Egyptian opposition parties to discuss political reform.
"What is going on is a flagrant violation of the political rights of citizens," Nur, a vocal government critic, said in comments carried by the country's semi-official Middle East News Agency.
State security investigators have accused Nur of forging all but 14 of the more than 2000 signatures he was required to present to the committee responsible for licensing political parties.
Investigators searched his home and office for additional documents.
Nur has described his party, one of just three to be given permission to operate in the past 25 years, as a liberal democratic party that represents youth.
"What is going on is a flagrant violation of the political rights of citizens"
He has made numerous suggestions for Egyptian economic and political reform, including constitutional amendments to allow for the president to be elected and the removal of the reference of socialism as the country's guiding principle.
Egypt holds presidential referendums, rather than elections, in which people vote "yes" or "no" for a sole candidate, who is nominated by the parliament, which President Husni Mubarak's party dominates.
In October, 650 activists and opposition political party members vowed to push for a constitutional amendment to end Egypt's system of one-man rule and bar Mubarak from standing at a referendum to he held later this year for a fifth term.
Before heading to the Nigerian capital, Abuja, on Saturday, Mubarak described calls for a change to the constitution as futile.
"Those who talk about direct elections and referendum, and trying to choose between them, must realise the referendum is based on the nomination of people's representatives in parliament," Mubarak said.