Group claims responsibility for Sunday’s attack near music festival in Bavarian city that killed suspect and wounded 15.
German police have arrested a Syrian man in the eastern city of Leipzig they suspect of planning a bomb attack.
Following a nearly two-day manhunt, Jaber Albakr was captured early on Monday after he went on the run on Saturday.
Authorities said later in the day that intelligence agencies had been watching him since September and that he appeared to have ties with the Islamic State of Iraq and the Levant (ISIL, also known as ISIS) group.
“The approach and behaviour of the suspect point to an IS context,” Joerg Michaelis, the chief investigator in the eastern state of Saxony said.
Police had been looking for the 22-year-old after finding several hundred grammes of an explosive in an apartment they raided on Saturday in the eastern city of Chemnitz.
Investigators said the volatile explosive was enough to cause significant damage.
Tom Bernhardt, a spokesman for Saxony police said authorities were informed that Albakr was being held at an apartment in Leipzig, and “immediately went there and arrested him.”
Albakr, who had been in Germany since last year, was officially recognised as a refugee, Berhardt said.
The suspicion that a refugee was planning a bomb attack will prove unwelcome news for Chancellor Angela Merkel, whose conservatives have lost support to the far-right Alternative for Germany (AfD) party over her open-door migrants policy.
Support for the AfD party has surged since last year’s refugee influx, particularly in eastern states where unemployment is generally higher than in the west.
Last week, police cited xenophobia and nationalism for two bomb attacks targeting a mosque and a convention in Dresden.
Far-right hate crimes targeting shelters for asylum seekers in the state of Saxony rose to 106 in 2015, with another 50 recorded in the first half of this year.
Merkel, who last month said she wished she could “turn back the time by many, many years” to better prepare for last year’s influx of almost one million people, has yet to say whether she will seek a fourth term as chancellor in elections next year.