Chen Chia-fu was arrested Wednesday for questioning on his sister's death, the Taipei Times reported.
He was taken in for questioning in the case Saturday but police said he gave vague answers and denied involvement in his sister's death.
The head of the victim, identified as Chen Wan-ting, was found, sprinkled with salt and wrapped in clothing and layers of plastic bags, in the men's restroom at Shangtian Temple in Shueishang Township, police said. She was reported missing by her mother on Dec. 17.
A suspect was captured on surveillance cameras near where the head was discovered. Police said that person resembled Chen Chia-fu.
Police said before Chen Wan-ting disappeared, her brother took out five insurance policies on her that had a total worth of about $151,000.
Police said they are searching for the rest of Chen Wan-ting's remains and trying to determine how she was killed.