Kenyan police say Emrah Erdogan is a German national of Turkish origin.
They allege he crossed into Kenya early in May from Somalia, where he had been fighting with the Islamist al-Shabab militia.
More than 30 people were injured in the blast which the Kenyan authorities say was caused by a bomb.
There had been confusion over its cause - officers first blamed an electrical fault.
The militant group al-Shabab has repeatedly threatened to stage revenge attacks after Kenya sent troops into Somalia last year.
The Kenyan government accuses the Islamist fighters of being behind various kidnappings on Kenyan soil and of destabilising the border region.
Mr Erdogan had been arrested and promised further details shortly.
He is among four people Kenyan police have been trailing since the attack.
They released his photo the day afterwards and appealed for information about his whereabouts.
Mr Erdogan, also known as Salahuddin al-Kurdi, is believed to have travelled to Waziristan in north-west Pakistan in early 2010 where he joined a militant Islamist group before going to Somalia last year, Reuters news agency reports.
Earlier this year, the African Union force backing Somalia's interim government was boosted from 12,000 troops to nearly 18,000 to incorporate Kenyan troops which entered Somalia last October in pursuit of al-Shabab militants.
Al-Shabab, which joined al-Qaeda earlier this year, is known to have recruited a number of foreign fighters - many of whom have fought in Iraq and Afghanistan.
Source: BBC News
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