McGrath (49) was last seen at his Checketts Ave home in Halswell on May 21, 2017.
Detective Inspector Kylie Schaare said police arrested a 51-year-old today.
"Our thoughts are with the McGrath family today as they come to terms with the fact that the arrest confirms their worst fears," she said.
Police spent about two months searching the Kate Valley Landfill in North Canterbury for clues and took away 200 pairs of jeans.
A small police presence was at a property on Halswell Rd late this afternoon. They included a forensic team and police dog.
Det Insp Schaare said no details would be released about the investigation, or the person arrested at this time.
"The arrest is another step in this journey and now there will be a judicial process to follow," she said.
The police investigation was called Operation Renovation, as McGrath was doing up his house when he went missing.
