A 20 year old man had been released on police bail following a hit and run accident in Crossmaglen, which has left world handball champion Conall McCavitt "serious" in hospital.
Mr McCavitt was struck in Cardinal O Fiaich Square in Crossmaglen shortly before 6.20am on Tuesday.
Police said the car did not stop.
Mr McCavitt, who is in his early twenties and from nearby Cullyhanna, was taken to the Royal Victoria Hospital in Belfast for treatment.
A 20-year-old man was later arrested on Wednesday on suspicion of a number of motoring offences but has since been released on police bail pending further enquiries.
A blue Volkswagen Passat, believed to have been involved in the incident, was recovered by police in the market area of the village following the collision.
Police continue to appeal for information fom anyone who was in the centre of Crossmaglen who witnessed the collision, or anyone with any information about the movements of the offending car or its occupants and ask that they contact Newry PSNI on 101, quoting reference number 488 of 27/12/16.
Mr McCavitt is a one-wall handball specialist who is a member of the Eugene Quinn club in Armagh city.
Terry Hearty, a Sinn Féin councillor for the area, said the community was "shocked and horrified" by what had happened.
"Details surrounding the incident are unclear," he said.
"Police are investigating and anyone with information should contact them. Meanwhile our thoughts and prayers are with this young man and his family."
Inspector Denise Graham appealed for anyone who witnessed the collision or has information about the movements of the car or its occupants to contact police or ring Crimestoppers anonymously on 0800 555 111.
Last week, six police officers were injured in the Crossmaglen area in two separate incidents in which their cars were rammed by another vehicle.
Three PSNI patrol cars had to be taken off the road as a result of the attacks.
