Police spokesman SSP Buddhika Manathunga told Daily Mirror that Yoshitha was arrested in the Beliatta town.
He was arrested under the Money Laundering Act.
The arrest occurred following a recent CID investigation on a disputed land in Kataragama.
Yoshitha Rajapaksa is a former Navy Officer.
He was arrested just months after a new government led by President Anura Kumara Dissanayake was formed in November.
In the run-up to the elections, the new government had promised to arrest those accused of wrongdoing during Mahinda Rajapaksa's presidency between 2005 and 2015.