The 32-year-old was read his rights after being released from a hospital intensive care unit where he had been admitted after suffering gunshot wounds to his chest during a mass fight at Opium Beach Club in Marbella.
He was initially described as a victim of a stray bullet allegedly fired by a 40-year-old Dutchman who was remanded in custody along with a friend following a court appearance on Wednesday as part of an ongoing attempted homicide probe.
But detectives are said to have reached the conclusion he may have been involved in the altercation that led to the suspected gunman being stabbed and reacting by allegedly pulling out a pistol hidden in a belt bag inside his trousers and making a botched attempt to shoot his attacker.
His assailant is still being hunted by police after fleeing the VIP area on the stage where South African DJ Black Coffee was performing to a packed crowd when the drama occurred just after 1am on Monday and sparked a mass stampede to reach safety.
The unnamed Irishman arrested has been identified locally as one of the "friends" that accompanied the knifeman to the sell-out event.
On Thursday respected Malaga paper Sur reported the two groups involved in the ugly confrontation in the VIP area, where tables cost up to €5,000 (£4,260), were Dutch on one side and “mostly British” on the other.
It also reported the suspected gunman’s pal who appeared in court on Wednesday had told a judge the row that ended with the stabbing and shooting started when the knifeman served himself a drink from a bottle on their table without permission.
The man suspected of shooting four revellers declined to answer any questions from the judge during his behind-closed-doors court appearance.
But Sur said his companion claimed the man police are still hunting helped himself TWICE without permission to a bottle of alcohol they had paid for - and was kicked out of the beach club by bouncers before returning with the weapon he allegedly used to stab the suspected gunman.
A court official confirmed yesterday/on Wednesday: “A judge at Marbella Court of Instruction Number One, acting as a duty court, has remanded in custody the two people arrested over the incidents at Opium nightclub.
“Both are being investigated on suspicion of the crimes of attempted homicide, wounding and illegal possession of firearms, one as the alleged author and the other as an accomplice.”
A spokesman for Spain’s National Police said: “I can confirm the Irish national who was shot at Opium Beach Club has been arrested after leaving intensive care.
“He was arrested on suspicion of crimes of wounding and aiding and abetting.”
A well-placed source said: “He is currently under police guard in hospital.
“When he gets taken in for formal questioning at a police station obviously depends on how his health evolves.”
Once he is well enough he is set to be taken to a nearby police station for formal questioning before appearing in court so a judge can decide whether to release him on bail or remand him in custody pending an ongoing probe.
There is no suggestion at this stage any of the three other people hospitalised with gunshot wounds are thought to have been involved in the altercation that preceded the shooting.
Two, two men aged 18 and 36, have already been allowed to leave the Costa del Sol. The third is a Moroccan woman whose condition is currently unknown but was “serious” in intensive care on Tuesday and said to be “evolving favourably.”
Opium Beach Club, which lies just outside Marbella town centre between the beach and the A7 dual-carriageway running along the coast, remains closed and is not expected to open until next week at the earliest.
The popular venue said in a statement released earlier this week: “No words can express the level of sadness we feel after the events happening in our venue this last Sunday.
“We extend our solidarity to the affected people to whom we wish a speedy and complete recovery.”
Saying they were saddened “individual acts” had damaged the reputation of a stunning place, they added: “Following talks with the authorities, we have decided to voluntarily remain closed as we enhance the security measures and protocols in such a way that it is impossible for such a sad event to ever happen again.”
Felipe Juan Froilan, the nephew of Spanish King Felipe VI, was among the crowd and celebrating his 24th birthday with friends.
The drama caused a stampede with hundreds of people running towards a busy dual-carriageway outside the club and others heading for the beach below.
Marbella Town Hall spokesman Felix Romero has described the incident as a “one-off occurrence” and insisted: “Marbella is a very safe place.”
Juan Rambla, vice-president of a regional nightclub association, added: “Shootings like this occur in unexpected places by someone who is not alright or by members of the public no-one wants around.”