Diamond arrest comes after he posted two videos on his Instagram handle that were considered explicit.
Tanzania's Communications Minister Harrison Mwakwembe said in parliament that the images project acts that go against a law that bans such acts. Police are also looking for Bongo artist Nandi over similar claims.
An Instagram post of Diamond playfully kissing an unidentified woman has been shared by several news site.It is unclear if these are the pictures that have got the artist in trouble.
Some people on social media are speculating that the musician was getting back at his former partner who left him.
Last month Tanzania's authorities banned 13 songs by local artists including Diamond. It came after President John Magufuli complained about obscenity in music videos.