Michael Scott Wallace was arrested less than an hour after dropping into the Himatangi Beach Cosmopolitan Club where detectives were having dinner.
The 44-year-old was yesterday charged with the murder of German tourist Birgit Brauer on September 20. He will appear in the New Plymouth District Court today.
Police said further charges were likely.
Ms Brauer's parents were told of the arrest just hours after holding a private family service and burial in their home city of Dresden.
The 28-year-old hitch-hiker's stabbed and beaten body was found dumped at Lucy's Gully southwest of New Plymouth.
Wallace was arrested on Saturday night following a dramatic pursuit involving members of the elite police Special Tactics Group and the Armed Offenders Squad.
It is understood police were tipped off when Wallace walked into the cosmopolitan club in the coastal town where his elderly mother and brother live, asking for someone.
"It was about 6.30pm to 6.45pm. He came into the back smoking room and just went in one door and out the other and jumped back in his wagon," said a worker at the club.
"He asked for someone he thought was at the club but he wasn't there and just left again."
The worker, who identified himself as Paul but would not give a surname, said detectives were dining in the club at the time.
"He must be pretty screwed up to come in here with all the cops hanging around.
"There was actually a couple of detectives in here having their dinner so the person he spoke to came in and spoke to them and it was all on."
Police said the pursuit began at Tangimoana and ended a short time later at Glen Oroua, 16km west of Palmerston North, where Wallace abandoned the Nissan Safari and ran on to a rural property before he was arrested about 7pm.
Wallace was identified as a chief suspect in the murder case on Thursday, when police named him as the driver of a stolen Hilux 4WD linked to the inquiry.
That vehicle was recovered from the Ohau River between Levin and Otaki on September 28.
On Saturday, police asked for sightings of a Nissan Safari stolen from Hokio Beach near Levin a week ago.
Detective Senior Sergeant Grant Coward, who has led the hunt on behalf of Ms Brauer's family, yesterday thanked the public for helping to find Wallace and providing information.
Police still wanted to hear about sightings of Wallace between Saturday, September 24 and his arrest. "There's a long way to go yet. It's a giant leap but by no means complete.
"We still have to go through a large amount of information provided to us."
Mr Coward said the public could help piece together where Wallace had been living during the police hunt. There was no evidence anyone had helped him.
"If he was apprehended in the Manawatu, there's a good chance he's been there the entire time."
Mr Coward said Wallace was arrested without incident. Police had taken "precautionary measures" with the use of the Special Tactics Group and other armed police.
He would not comment on whether a firearm was found in the Nissan.
There had been a tremendous public response to police appeals for help in the case, said Mr Coward.
"It's the sort of crime that people just don't tolerate. It's a nasty crime on a visitor to our country. We pride ourselves on having a beautiful country and we don't tolerate this sort of thing happening."
Numerous sympathy cards from the public had been forwarded by the police to Ms Brauer's family, who buried her at a small church outside Berlin at the weekend.
Martin Appel, the church minister, said her parents were distraught.
One News said the attendance was so big the congregation spilled out on to the church steps. But they heard of Ms Brauer's great love of New Zealand, a love her parents said she paid for with her life.
The minister said Ms Brauer had been "in the prime of her life and when the younger must go before the older it's always a catastrophe".
The Brauer case
Sep 20: Ms Brauer's body was found in Lucy's Gully.
Sep 22: Police focus on a Toyota Hilux which Ms Brauer was seen getting into.
Sep 28: A member of the public leads police to an abandoned Toyota Hilux 4WD vehicle on the banks of the Ohau river.
Sep 29: Police want to speak with a man who allegedly stole that vehicle from his employer.
Oct 3: Police find two backpacks belonging to Ms Brauer at remote Lake Rotokere.
Oct 6: Police reveal they are searching for Wallace in relation to Ms Brauer's murder.
Oct 8: Armed police arrest Wallace.
Wanted man and police at same club
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