A man arrested in connection with the Kingsmill atrocity was previously questioned by detectives at the time of the attack, the Irish News understands.
The 59-year-old was detained in Newry by detectives investigating the mass shooting in Co Armagh 40 years ago and taken to Belfast for questioning.
The development in the unsolved case came two months after police announced a forensic breakthrough, just days into a fresh inquest into the 10 deaths.
At the end of May, the PSNI revealed a potential match had been made to a palm print left on a getaway van used by the republican killers.
The Irish News revealed that the palm print had been matched to veteran republican Colm Murphy, who questioned why the PSNI had only made the discovery now.
In an interview with the Irish News, the 63-year-old republican said: "I've been arrested about 30-plus times since 1976, I've been in jail a few times as well. My fingerprints must have been taken upwards of 40 times, but we're meant to believe this only flagged up now?"
Some relatives also expressed concern about the timing of the PSNI announcement, fearing it would affect the inquest.
The man being held last night was being questioned on suspicion of the 10 murders and Mr Black's attempted murder.
The IRA was widely blamed for what became known at the Kingsmill massacre.
The factory workers were ambushed as they travelled along the Whitecross to Bessbrook road in south Armagh on January 5 1976 in an attack seen as a reprisal for a series of loyalist killings in the same area in the days beforehand.
The men's minibus was stopped by a man waving a red light and those on board were asked their religion by a camouflaged gunman with an English accent. The workers had initially mistaken the man for a soldier.
The only Catholic workman was ordered to run away.
The killers, who had been hidden in the hedges, ordered the remaining 11 Protestant men to line up outside the van and then opened fire.
Alan Black was the only survivor of the attack.
A van used by the gunmen was later found abandoned across the border. The palm print was discovered on that vehicle.
It was re-examined by forensic scientists this year, only days after a long-delayed inquest into the deaths got under way in Belfast.
A lawyer for the PSNI told stunned relatives attending the hearing that a potential match on the police's database had been made.
It emerged that a forensic scientist had asked to run fresh tests on the print after reading media coverage about the opening of the high-profile inquest.
Mr Black last night said he was struggling to take in news of the arrest.
"I don't really know what to think to be honest," he said.
"I am still trying to take it in.
"For 40 years the police were not interested in Kingsmill but this, I suppose, is a development at least.
"We will just have to wait and see what happens and whether any charges are brought against this person."
Colin Worton, whose brother Kenneth was killed, said: "We were disillusioned when we were told at the inquest about the discovery of the palm print after 40 years.
"But I believe this has to be a positive development.
"We will have to wait and see the justice system take its course."
Karen Armstrong, who lost her brother John McConville, said: "We will have to wait and see how it all pans out."
Ulster Unionist MLA Danny Kennedy described the arrest as a "potentially positive development".
"The sectarian massacre of 10 Protestant workmen by the IRA remains a stain on south Armagh," he said.
"The families and sole survivor have waited 40 years in their pursuit of maximum truth and justice for this brutal and barbaric crime."
DUP MLA William Irwin also said the Kingsmill families deserved justice.
"There is obviously an active criminal case which must be taken forward and I would hope that can be taken forward swiftly."
