Valerie Moore, 47, was taken into custody on suspicion of starting the inferno that swept through the Mizpah hotel in the gambling town of Reno late on Tuesday, city fire and police officials said in a statement.
At least six people were killed and 31 were injured but fire officials warned the toll may increase as crews carefully pick their way through the gutted shell of the 84-year-old hotel in the city's casino district.
Initial reports indicated there had been only one fatality but the toll increased as fire-fighters investigating the building after quelling the blaze in the early hours of Wednesday discovered five more bodies.
"We still have teams going through the building," said Reno Fire Department spokesman Steve Frady. "There is one area of the hotel where a roof has collapsed so it is possible we may find more fatalities."
Some 50 fire-fighters raced to the scene to tackle the blaze, which is reported to have started after a mattress was set on fire, reports said.
Fire-crews fought flames for around four hours before bringing the fire under control, officials said.
Police estimated around 60 to 80 people had been inside the hotel when the blaze began. Built in 1922, the Mizpah is a primarily residential hotel and is reportedly listed as a historic monument by civic authorities.
Local media reported that around 56 residents of the hotel were being housed in a local gymnasium.
Mizpah Hotel manager Sharon Steele told local media staff had run from room to room trying to evacuate residents, some of whom jumped from windows to the street below.
Steele said she also did not know why the blaze had swept through the recently renovated hotel so quickly. "It's a brick building," Steele said. "I don't know why it burned so fast."
The hotel had recently been fitted with new carpeting and furniture from the former Reno Hilton. "It was just gorgeous, and now it's all gone," Steele said.
"Many residents have been here 20 to 25 years. It's a shock. It's traumatic."

Copyright AFP (Agence France-Presse), 2006