Police were called to a recycling station in the town centre at lunchtime on Tuesday where a woman was said to have been attacked with some form of sharp weapon, and found her dead at the scene.
Several witnesses gave accounts of a suspected perpetrator who fled the area, which led to a manhunt where police searched the town with helicopters and detection dogs.
The man was finally arrested in the evening, suspected of murder on "good grounds" (the lower degree of suspicion according to Swedish law). The woman, who was 55 knew the suspected perpetrator, who is in his 60s, according to police.
"I don't want to go into where he was found. We aren't ruling out the possibility that there could be other perpetrators," Västmanland police spokesperson Jonas Partheen told news agency TT.
Forensic investigations of the crime scene, several cars and homes were carried out. Finds were made during the afternoon that may be used as evidence, but police did not want to go into further detail about them.
"The investigation continues now. We're going to hold several interviews and carry out forensic analysis the finds," Partheen said, adding that the woman has not yet been identified.