The man, aged in his 40s, was arrested in the Monaghan area this afternoon and is being held held at Monaghan Garda Station under Section 30 of the Offences against the State Act 1939.
Donaldson was blasted to death at a cottage at Cloghercor, Doochary, in April 2006. Two men arrested in April were later released without charge.
Donaldson Sinn Fein’s administrator in the Stormont assembly when he was outed as a tout.
In 2002 he was arrested by the PSNI, supposedly in connection with a republican spy ring, though it later emerged that the raid on Sinn Féin offices which led to his arrest was part of an operation to safeguard Donaldson’s status.
He was outed as a PSNI and MI5 informant by Gerry Adams in December 2005, and went into hiding.
The Provos were blamed for his murder – but it later emerged that dissidents had carried out the killing.