The boy, who was not identified, will be charged with homicide, Calaveras County Sheriff Gary Kuntz told reporters.
The April 27 attack on Leila Fowler shook the tightknit Valley Springs community of about 7,400 people and set off a massive manhunt.
The boy had told police he found his sister's body and encountered an intruder in the home while their parents were at a Little League game. He described the man as being tall with long gray hair.
Police have said there was no sign of a burglary or robbery at the house.
Investigators did a door-to-door sweep of homes, storage sheds and horse stables scattered across the oak-studded hills foothills of the Sierra Nevada mountains. Divers also searched two nearby reservoirs in search of clues.
As part of the investigation, authorities seized several knives from the home Leila shared with her father, stepmother and siblings to determine if one could have inflicted the fatal wounds. A neighbor who told detectives she saw a man flee the Fowler home later recanted the story and was discredited by police.
Leila's brother was taken into custody at 5:10 p.m. Saturday and police hastily called a news conference to announce the arrest.
"Citizens of Calaveras County, you can sleep a little better tonight," Kuntz said.
Authorities spent over 2,000 hours on the investigation "to provide Leila Fowler's family answers to her death," the sheriff said.
Kuntz said the investigation was ongoing. He declined to provide further details.
Several days after the killing, hundreds of people gathered at Jenny Lind Elementary School where Leila was a popular 3rd grader. Her mother, Krystal Walters, tearfully thanked the crowd for the support.
"I just want to thank the entire community and all of our family and friends for all the overwhelming amount of support you've given our family," Walters said at the time. "It will never be forgotten. Thank you."