The suspect, 27-year-old Maximilian T., 27, was detained in Kehl, Baden-Württemberg on Tuesday morning, according to prosecutors. Spiegel Online had first reported on the arrest.
Maximilian T. was stationed at the same Franco-German base near Strasbourg as army lieutenant Franco Albrecht, who was arrested on April 26th.
Albrecht, 28, had managed to create the false identity of a Syrian fruit seller from Damascus and to register himself as a refugee who was granted asylum, a space in a shelter and monthly state benefits.
Their plan, say prosecutors, was to commit an attack, for which they had obtained a pistol and drawn up a hit list of pro-refugee politicians, including Gauck and Justice Minister Heiko Maas.
The pair, along with 24-year-old student Mathias F., had hoped the murder would "be seen by the population as a radical Islamist terrorist act committed by a recognized refugee," said a statement from the prosecution.
Albrecht was first questioned by Austrian police in February at Vienna airport after he tried to retrieve a loaded, unregistered handgun he had hidden in a toilet there days earlier.
This sparked an investigation that threw up the big surprise - that Albrecht had in December 2015 created a false identity as a Syrian refugee even though he spoke no Arabic.
Germany has taken in more than one million asylum seekers since 2015, many from Syria, Iraq and Afghanistan, amid an initial wave of goodwill followed by an anti-foreigner backlash and a spate of racist hate crimes.
Prosecutors say the three suspects "planned an attack against a high-ranking politician or public figure who was supportive of what the accused saw as the failed immigration and refugee affairs policies".
Albrecht "was meant to carry out the attack" and had created the fictitious identity of a refugee who was meant to be seen as the perpetrator.
Maximilian T., who served in the same infantry battalion, allegedly made excuses for him during his absences from the Illkirch base, penned the death list, and helped Albrecht procure the French-made handgun in Vienna, prosecutors said.
News portal Spiegel Online said the newly-arrested suspect was also a lieutenant and a close friend of Albrecht, and that both were part of an online chat group in which they shared right-wing extremist content.
“They were prepared to kill for their cause, or at least that’s what they claimed,” one investigator told the news site.
The strange case has heaped pressure on Defence Minister Ursula von der Leyen, who is often mentioned as a potential successor to Chancellor Angela Merkel.
The scandal worsened after she criticized "attitude and leadership problems" within the military, angering many in the armed services.
It has since emerged that Albrecht had expressed right-wing extremist views in a master's thesis he submitted in 2014, in which he theorised about the end of Western civilisation through immigration, but that he faced no disciplinary action.
SEE ALSO: How the German 'refugee' soldier case lays bare asylum chaos