A 20-year-old man is to appear in court accused of causing the fire which destroyed the Commercial Hotel on the main street in Yass on Monday morning.
Police are not releasing his name but say they arrested him at a nearby address on Comur Street on Monday afternoon.
"The man was taken to Yass Police Station and charged with damage property by fire or explosion greater than $15,000," the police said.
He was refused bail to appear at Goulburn Local Court.
More than 40 firefighters from NSW and the ACT brought the blaze under control just before dawn on Monday, though two fire engines, including an overhead pump remained on the scene through the morning.
Business owners on the street said the old brick hotel was badly damaged by the fire, with the roof collapsed and the internal structures destroyed.
A spokesman for Fire and Rescue NSW said firefighters had struggled successfully to prevent the blaze spreading to neighbouring shops, including a carpet shop, but the empty hotel itself was destroyed.
The historic hotel was derelict after it closed to customers 18 years ago but recently there were plans to redevelop it as a "family-friendly pub".
It had been a central venue in Yass for 190 years.
Some demolition work had taken place but refurbishment was yet to be complete.
