The Real IRA has been blamed for the murder of Ireland's godfather of crime, Eamon Kelly (63).
The cold-blooded shooting has sparked fears of further bloodshed on the streets as a result of the ongoing feud between dissident republicans and crime gangs.
Kelly, a father of eight, was shot dead from a passing car as he walked towards his home at Furry Park Road in Killester, on the northside of Dublin.
Gardai arrested a Real IRA suspect a short distance away who is thought to have been one of the two-man assassin team.
The killing may have been witnessed by a 13-year-old girl.
Kelly's network of contacts among the major gangs here and their suppliers overseas made him an unrivalled figure in the underworld.
He used his vast experience, gained through drugs trafficking and his links to the Official IRA, to become a mentor to some of the younger generation of gangland leaders.
He was aware that his life was under threat as he had been named privately by members of the Real IRA as being part of a conglomerate of gangsters who joined together to organise a hit on Alan Ryan.
The leader of a Real IRA faction in the city, Ryan was murdered while walking with friends at Clongriffin last September and since then there were concerns about a retaliatory strike.
Two other major criminals, also named as organising the hit, have been missing from their usual haunts since that shooting.
But Kelly's insistence on living at home and regularly visiting local pubs and betting offices made him a soft target for a gunman.
Shortly before he reached his house at around 4pm yesterday, a dark blue car pulled alongside and the gunman fired several shots, hitting him at least three times in the chest.
The hitman and his accomplice then sped away on to the Howth Road and into Stiles Road in Clontarf.
A garda patrol, comprised of uniformed and plainclothes personnel, was on duty in the area and quickly arrived at the scene of the shooting when the alarm was raised.
The gardai went in pursuit of the getaway car and when they arrived at Stiles Road found the car on fire.
The two occupants fled on foot, and after a short chase one suspect was arrested by an uniformed garda.
The man, who is 32 years old and from the Bluebell area of the city, is suspected by gardai of being a key Real IRA activist in the capital.
He is alleged to be part of a faction that operated separately from Ryan's gang after the two men had an argument.
Gardai said last night they were trying to establish if the Bluebell group had been trying to ingratiate themselves with the leadership of the new terror alliance, in which the Real IRA is now involved, by carrying out the murder of Kelly.
Officers said it was possible the hit might have been carried out for other reasons – but think it is more likely that it is linked to the feud between the terrorists and the crime gangs.
Gardai interviewed a number of people who were in the vicinity at the time of the shooting, including a 13-year-old girl, to establish if they could help them with their enquiries.
Eamon Kelly lived in the North Strand area of Dublin until 1974 when he moved to Killester.
His wife, Ann McCormack, who died of cancer last year, was the daughter of legendary Dublin boxer of the 1940s Spike McCormack. He was a close associate of former INLA leader, Dessie O'Hare. Kelly was convicted in May 1993 of possession of €600,000 worth of cocaine for supply in September 1992 and was sentenced to 14 years imprisonment.
Last night gardai brought the suspect for questioning to Mountjoy station where he was being held under section 30 of the Offences Against the State Act. Like Ryan, he had previously served a prison sentence in the dissident wing at the top security Portlaoise jail.
Gardai disclosed that the getaway car was a black Lexus, registration number 96 D 27994.
The car was found burnt out at Stiles Court, a cul de sac at the rear of Clontarf cricket club.
House to house inquiries were also carried out yesterday evening in the area.