The spectator, a 30-year-old French woman, is in custody at a police station in Landerneau, Brittany – the north-west French region where the Tour de France, the world's biggest cycling event, held its first four stages.
The spectator is accused of involuntarily causing injury and putting the life of others at risk.
On Saturday, German cyclist Tony Martin was sent tumbling when he rode straight into a cardboard sign being held out by a fan looking the other way at a television camera, creating chaos with 47 kilometres (29 miles) left of the stage.
The woman could be seen in footage, which went viral on social media, holding up a sign with "granny and granddad" written in German.
The spectator can be seen looking away from the peloton as they approach, while holding her sign too far into the road.
The spectacular crash left eight riders being treated for injuries and forced one competitor to pull out of the Tour completely.
The incident held up the race for more than five minutes.
Another huge pile-up occurred in a nervy finale on narrow roads on Monday, leading the Tour de France riders to put their collective foot down one kilometre into the fourth stage on Tuesday – literally – bringing the race to a halt for about a minute in a silent protest for safer racing conditions after the crashes.