Prosecutors entered the former auto executive's Tokyo home early Thursday morning, and rearrested him on new allegations of financial misconduct.
The former chairman of Nissan (NSANF) and Renault (RNLSY) had been released on bail in early March after spending 108 days in custody.
During a press briefing on Thursday, a spokesman for the prosecutors said Ghosn was rearrested partly because there was a possibility he could destroy evidence. (Update: A Tokyo court granted prosecutors' request to hold Ghosn until April 14.)
Prosecutors accuse Ghosn of using Nissan funds for personal use. They allege that from 2015 to 2018, Nissan sent payments to an overseas dealer that was actually controlled by Ghosn. Nissan lost about $5 million as a result, according to prosecutors.
The prosecutors' spokesman declined to disclose the name of the dealer or where it is based. Several news agencies have reported that under Ghosn's leadership, the Japanese automaker made questionable payments to a Nissan distributor in Oman.
One of the most prominent figures in the global auto industry, Ghosn is awaiting trial on separate charges he understated his income for years and abused his position by transferring personal investment losses to Nissan. He denies those charges.
"My arrest this morning is outrageous and arbitrary," Ghosn told CNN Business via a spokesperson. "It is part of another attempt by some individuals at Nissan to silence me by misleading the prosecutors. Why arrest me except to try to break me? I will not be broken. I am innocent of the groundless charges and accusations against me."
Ghosn's lawyer said the arrest was "highly unusual," calling it another example of the questionable way criminal suspects are treated in Japan.
Prosecutors are using Ghosn's detainment "to put pressure on the defendant," Junichiro Hironaka told reporters through a translator. "In that sense I think it is hostage justice," he added.
Hironaka said prosecutors confiscated documents from Ghosn, and also seized the passport and mobile phone of his wife, who was home at the time of the arrest.
The arrest comes just a day after Ghosn took to Twitter, vowing to "tell the truth" behind his shocking downfall at a press conference next week.
Renault unveiled new allegations against Ghosn on Wednesday, claiming that expenses incurred by its former CEO and chairman involved "questionable and concealed practices" that violated its ethics rules. It also announced Ghosn's resignation from its board.
Ghosn's downfall and prolonged detention shocked the international car industry, created tensions between Nissan and Renault, and raised questions about Japan's criminal justice system.
Since Ghosn's first arrest in Tokyo on November 19, he has been ousted from his role as the head of Nissan, Renault and Mitsubishi Motors, which he had brought together to form the world's largest car-making alliance.
Nissan declined to comment on Ghosn's latest arrest. A spokesman referred CNN Business to an earlier statement claiming its own investigation into Ghosn "has uncovered substantial evidence of blatantly unethical conduct."
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