Security sources in Northern Ireland are claiming that the man murdered during a confrontation in Cullaville, Co Armagh on Thursday was a member of the IRA.
Meanwhile, republican sources say that Mr Keith Rogers (24) was unarmed when he was hit in the chest by a number of shots. He died later in the Louth County Hospital in Dundalk.
Local Sinn Féin Assembly member Mr Conor Murphy told the BBC yesterday he believed there was no IRA involvement in the incident which involved two opposing groups and up to 10 men. Shots were fired during the confrontation, hitting three men.
A PSNI spokesman last night confirmed that a man was being questioned by detectives.
He said: "A man presented himself to police yesterday and was subsequently arrested."
Republicans have threatened revenge after the murder of Mr Rogers which is thought to have been part of a violent feud over land.
Police and troops on both sides of the Border braced themselves for new attacks amid heightening fears of reprisal shootings.
Mr Rogers belonged to a mainstream republican family. As detectives questioned a man about possible IRA links to the shooting, a republican source confirmed: "People are very, very angry.
"There are no guarantees about anything now because you are dealing with very volatile people in a very volatile situation. The people responsible for this have put themselves in a very awkward situation. You can't just go around shooting people in the street." Both sides blamed each other for the shooting.
Two other men were wounded, including Mr Kevin O'Callaghan (40), who had been in a car with his son Sean (21).
Mr O'Callaghan's brother, Patrick, claimed the dead man was part of a masked and armed gang who tried to kidnap Kevin during the confrontation yesterday. Bitter rivalries had flared over a land dispute involving his family, he claimed.
Calling on the republican movement to clarify its position on the attack, Mr O'Callaghan denied that his brother shot Mr Rogers.
Hostilities intensified last month when another of the brothers was subjected to a paramilitary-style punishment attack.
Mr Danny O'Callaghan lost a foot after being shot in the wrists and ankles.
Even though the violence may not have been sanctioned at an official level, police have privately admitted the IRA will not let this rest.
The Provisionals are under intense scrutiny amid ongoing efforts to restore devolution. But sources in south Armagh admitted the IRA has now been dragged into the feud.