Bill Browder, the UK-based financier who has for years led an international campaign against Vladimir Putin, was taken to a Madrid police station on Wednesday morning after being detained on a Russian Interpol arrest warrant.
Mr Browder, who describes himself as "Putin's number one enemy", tweeted on Wednesday morning that he had been arrested by Spanish police, posting pictures from the back of a police car and of the warrant given to him.
He was released two hours later after police discovered that the Interpol warrant had in fact expired.
The American-born businessman, who has held British citizenship for the past two decades, was last year sentenced by a Russian court to nine years in prison on fraud and tax evasion charges.
The detention of Mr Browder - widely considered the creator of the Magnitsky Act, an international sanctions regime against Russian officials named for his lawyer who died in Russian custody - drew immediate international alarm.
Guy Verhofstadt, the European Parliament's Brexit negotiator, said it was "worrying that autocratic Russia can get democratic Spain to go after someone fighting to expose Putin's crimes & those responsible for Magnitsky's murder".
A similar 2013 sentence handed down in Russia had been dismissed by Interpol, the agency assessing it to be "predominantly political in nature".
A Spanish police spokesperson said that in this case Interpol had failed to delete the warrant from its database when it had expired, and that once at the police station, they had realised it was no longer valid.
Mr Browder claimed this was "the 6th time that Russia has abused Interpol in my case".
Mr Browder ran a top investment fund in Russia in the 1990s but was deported in 2005 and his business seized.
Sergei Magnitsky, his Russian lawyer, was arrested after reporting the theft of hundreds of millions of dollars and died in custody in 2009, officially from heart failure.
However Mr Browder has always claimed he was murdered, and insists too that he himself is a top Kremlin target.
In March he told The Telegraph he lived his life in the knowledge that "that the Russians are trying to kill me".
Mr Browder said he was in Madrid to give evidence to a top Spanish prosecutor "about the huge amount of money from the Magnitsky case that flowed to Spain", and that following his release his "mission carries on".