The head of the IMF, Dominique Strass-Kahn, is being questioned by New York police over an alleged sex attack on a hotel maid, say reports.
Mr Strauss-Kahn, 62, was taken off a plane at John F Kennedy airport minutes before it left for Paris.
Police said he had not been charged.
The married former French finance minister is also a leading Socialist Party politician and is considered a possible candidate in the 2012 presidential election.
He is due to attend a meeting of European Union finance ministers in Brussels on Monday to discuss the bailouts of Portugal and Greece.
A spokesman for New York’s Port Authority said they had arrested Mr Strauss-Kahn at the request of the New York Police Department (NYPD).
He is now in the custody of the NYPD, who said he was co-operating fully with their enquiries.
Spokesman Paul J Browne said the allegations had been made by a 32-year-old woman who worked at the Manhattan hotel, which has been identified as the Sofitel near Times Square.
The IMF had no immediate comment on the incident.
‘Error of judgement’
Mr Strauss-Kahn ran for leadership of the French Socialist Party in 2007 but eventually came second to Segolene Royale.
Later that year, he was appointed managing director of the International Monetary Fund.
In 2008, he was investigated by the IMF board over his relationship with a female member of his staff.
The board ruled his actions “reflected a serious error of judgment” but that the relationship had been consensual. He apologised to IMF staff and his wife, French TV personality Anne Sinclair.
Mr Strauss-Kahn has not yet announced whether he intends to run in the 2012 French presidential elections but is widely expected to do so.
He has been the subject of much media attention in France in the past week over allegations that he lives a luxury lifestyle incompatible with his Socialist position.
His supporters have said the reports are part of a smear campaign against him.
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IMF head questioned over ‘attack’