Chief military spokesman Major General Athar Abbas said the Major, who retired two years ago, has been arrested and is currently being questioned by the intelligence agencies.
He was held as he was 'in communication' with Headley and Rana, Abbas said.
However, Abbas denied a report that the authorities had detained five army officers, including two serving Colonels and a retired Brigadier, describing it as a 'fabrication' by those running a 'campaign' to embarrass the Pakistan Army.
The retired Major, who was not identified, was reportedly arrested in the garrison city of Rawalpindi that houses the Pakistan Army's General Headquarters. He was taken into custody after FBI gathered information that he was in e-mail and telephonic contact with Pakistani-origin Chicago resident Headley (49) and Pakistan- born Canadian national Rana (48).
Headley and Rana were in contact with the Lashkar-e-Tayiba [ Images ] and militant commander Ilyas Kashmiri, the FBI has said.
According to documents filed in court by the FBI, Headley traveled to Pakistan to meet a man identified only as 'individual A' and they together visited Kashmiri in the restive tribal belt bordering Afghanistan.
The FBI said Headley traveled to Pakistan this year and was headed there again when he was arrested on October 3 at Chicago's O'Hare airport.