The suspect - identified as Turkish-born Gokmen Tanis, 37 - was seized after a manhunt that convulsed the Dutch city of Utrecht.
The shooting took place at a busy intersection in a residential neighborhood. One witness told local media that “a man started shooting wildly”.
Police erected a white tent over an area where a body appeared to be lying next to the tram.
Dutch Justice Minister Ferd Grapperhaus said the attacker “was known” to justice authorities and had a criminal record, but would not elaborate. Local media reported that he had been charged several times over the past years, including an attempted manslaughter charge.
“If it had terror motives, that is being investigated. But it was very serious. The world shares our grief,” Prime Minister Mark Rutte said.
The attack came three days after 50 people were killed when an immigrant-hating white supremacist opened fire at two mosques in Christchurch, New Zealand, during Friday prayers. There was no immediate indication of any link between the two events.
Dutch authorities reduced the threat level in the city following the arrest, which came after a manhunt involving heavily armed officers with dogs. During the hunt, police released a photo of a bearded Tanis aboard a tram in a blue hooded top.
“We cannot exclude, even stronger, we assume a terror motive. Likely there is one attacker, but there could be more,” Utrecht Mayor Jan van Zanen said as police searched for the suspect.
In the immediate aftermath of the attack, Dutch military police tightened security at airports and key buildings in the country, and Rutte declared: “If it is a terror attack, then we have only one answer: Our nation, democracy, must be stronger that fanaticism and violence.”
A dog wearing a vest with a camera mounted on it was also seen outside the building.
The Netherlands’ anti-terror coordinator, Pieter-Jaap Aalbersberg, raised the threat alert to its highest level, 5, around Utrecht, a city of nearly 350,000.
Political parties halted campaigning ahead of provincial elections scheduled for Wednesday that will also determine the makeup of Parliament’s upper house. In neighboring Germany, police said they stepped up surveillance of the Dutch border, watching major highways, minor crossings and train routes.
German authorities said they were told to look out for a red Renault Clio compact car but were later informed it had been found abandoned in Utrecht.
Turkey’s foreign ministry condemned the shooting, “regardless of the identity of the perpetrator and the motivation behind it” said it stood with the Dutch people and the government.
Diplomatic relations btewen the two countries have been strained since in 2017, when the Netherlands blocked Turkish government officials from holding campaign ralliesfor a referendum back home, and Turkey’s president compared Dutch and German politicians to Nazis and fascists.The two countries re-appointed ambassadors in September 2018 to “normalize relations.”
The ministry said earlier that Turkish and Dutch officials would meet Tuesday to discuss “bilateral relations” and cooperation.