Officials have said the charges involve allegations that date to the early 2000s.
Mr Epstein, 66, a wealthy hedge fund manager who was once counted as a friend of former president Bill Clinton, the Duke of York, and President Donald Trump, was taken into custody and is expected to appear in Manhattan federal court on Monday.
One of the officials told the Associated Press that Mr Epstein is accused of paying underage girls for massages and molesting them at his homes in Florida and New York.
The arrest, first reported by The Daily Beast, comes amid renewed scrutiny of a once-secret plea deal that ended a federal investigation against him.
That deal, which is being challenged in Florida federal court, allowed Mr Epstein to plead guilty to lesser state charges of soliciting and procuring a person under age 18 for prostitution.
He avoided a possible life sentence and was instead sentenced to 13 months in jail.
The deal also required he reach financial settlements with dozens of his once-teenage victims and register as a sex offender.
His deal was overseen by former Miami US Attorney Alexander Acosta, who is now Trump’s labour secretary.
Mr Acosta has defended the plea deal as appropriate under the circumstances, though the White House said in February that it was ‘looking into’ his handling of the deal.