Owaisi, who was subjected to medical examination at the Gandhi Hospital here for his fitness status, is expected to be taken to Nirmal town in Adilabad district, where a case was registered against him for the alleged provocative speech.
He arrived from London yesterday and had sought four days to appear before the police on medical grounds.
He was also booked under relevant sections of IPC by Nizamabad and Osmania University police here for the alleged hate speeches.
As he failed to appear before Nirmal Police on health grounds yesterday, investigating officer of Nirmal (Rural) A Raghu visited Owaisi's house in Banjara Hills here last evening and found that he looked fit to face questioning, police sources said.
However, Owaisi complained of internal pain and hence was subjected to medical examination by government doctors at Gandhi Hospital on Tuesday.
After getting the medical report, police decided on his arrest, they said.
It was still not clear whether he would be produced before a magistrate in Hyderabad or taken to Nirmal town.
Police was tight-lipped about the future course of action as they fear it may create law and order problem.
As the news of his arrest spread, hundreds of MIM workers and his supporters gathered in front of Gandhi Hospital. Police had a tough time in controlling the protesters and preventing them from gatecrashing into the hospital.
Police have already intensified security arrangements in the city, particularly in Old City -- a stronghold of MIM -- by deploying additional forces as a precautionary measure.
As news of his arrest spread, hundreds of MIM workers and his supporters gathered in front of Gandhi Hospital. Police had a tough time in controlling the protesters and preventing them from gatecrashing into the hospital.
Police intensified security arrangements in the city, particularly in Old City--a stronghold of MIM Party, by deploying additional forces as a precautionary measure.
Earlier in the day, a police escort team reached the MLA's house at Banjara Hills and took him to Gandhi Hospital here after the Nirmal rural police issued a notice to Akbaruddin to make himself present for the medical examination.
Akbaruddin has already been issued notices to appear before Nizamabad Police today and also before the Osmania University Police on January 10 in connection with the further probe into the cases registered against him.
Owaisi has approached the Andhra Pradesh High court seeking to quash all the FIRs registered against him at different police stations in the state.
Tension prevailed outside the Hospital as scores of supporters of Owaisi assembled near the premises and raised anti-government slogans.
Additional security forces were also deployed in parts of the Old City as a precautionary measure following speculation that Owaisi would be arrested after his medical tests.
Gandhi Hospital Superintendent Dr S Mahbub said medical examination of Akbaruddin was conducted by a team of five doctors.
"A bullet is there on the lower side of his back," he medical superintendent said. A rival group had attacked Akbaruddin in April 2011 over a land dispute issue in Barkas area here. He had sustained bullet injuries in the attack.
Meanwhile, protests and demonstrations continued by BJP workers and VHP members at Indira Park and Alwal here and in Adilabad and Nizamabad districts demanding immediate arrest of Owaisi.