The name of the Shiite sheik was not released. He was arrested in the port city of Tyre Monday and was known to be critical of Hezbollah, the Lebanese daily reported Tuesday.
The suspect ran an organization called the Arab-Islamic Resistance, which he said had 1,500 members, the source told the newspaper. The sheik was allegedly involved in firing rockets at Israel in 2009, the newspaper quoted the source as saying.
Lebanon arrested a number of people suspected of spying for Israel in 2009.
The newspaper said Lebanese President Michel Suleiman has called for severe punishment, including death sentences, for people suspected of spying for Israel.