The suspect, a 19-year-old German man, was arrested on Tuesday night after he performed a Hitler salute in front of 16 Israeli athletes visiting a memorial to the massacre at the 1972 Munich Olympics, German police said.
"One of the four security guards present was observed around 7:20 a.m. making a National Socialist salute," the police write in the statement.
He has been banned from attending all remaining events during the EC.
The athletes themselves had not noticed the gesture, which is banned in Germany and can result in up to six months in prison.
Sensitive time
The arrest took place at a sensitive time, when Munich is hosting the European Championships 50 years after the massacre at the 1972 Olympics, when 11 Israeli athletes were murdered.
Eight Palestinians, members of the terrorist group Black September, entered the Olympic Village in Munich and first killed two Israeli athletes and then took nine Israelis hostage.
The games were then temporarily suspended.
The terrorist group demanded that the Israeli state release 234 Palestinian prisoners.
Ended with tragedy
Israel refused and West German police and German authorities launched a rescue operation.
However, it ended in tragedy.
Black September executed all the hostages.
Also five, out of eight, members of Black September were killed as well as a West German policeman.