Mimi Marchand, who runs the BestImage agency, was taken into custody for questioning in Nanterre, west of Paris, along withjournalist Francois de Labarre. Labarre was released from custody without charge on Thursday evening.
Michèle Marchand works closely with a host of rich and powerful figures from the worlds of politics and entertainment, including President Emmanuel Macron and his wife Brigitte.
She was detained and had her home searched on the orders of magistrates investigating alleged corruption by former French president Nicolas Sarkozy, who has been accused of taking money from former Libyan dictator Moamer Kadhafi.
Sarkozy denies the charges.
Marchand and Labarre were instrumental in organising an interview in November with one of the main witnesses against Sarkozy, Ziad Takieddine, in which he withdrew his allegations against the former head of state.
Before retracting his claims in the Paris Match interview, Takieddine had alleged that he delivered suitcases stuffed with five million euros in cash from Tripoli to Sarkozy's chief of staff in 2006 and 2007.
Afterwards, speaking to French investigators, Takieddine changed his story again, retracting what he had told Paris Match and saying that his words had been "deformed".
Underground negotiations alleged
The investigative website Mediapart, which broke the news of Marchand and Laberre's detention, said the pair were suspected of "underground negotiations with Mr Takieddine" in order to convince him to withdraw his allegations against Sarkozy.
Under French law, this could be a criminal offence of witness tampering.
Paris Match condemned the arrest of one of its journalists which it said was "contrary to all democratic principles".
Reporters Without Borders chief Christophe Deloire tweeted that it was "obviously disporportionate" that five armed officers had banged on the door of a journalist in the presence of a small child and the arrest was part of a "deplorable legal process".
Marchand, prized for her ability to organise favourable press coverage and photographs, has worked closely with Sarkozy's wife Carla Bruni in the past.
Her lawyer has declined to comment.
In March, Sarkozy was found guilty of influence-peddling and handed a three-year prison sentence for attempting to influence a judge to obtain information in a separate case.
Most of the sentence was suspended and he is appealing, meaning he is unlikely he go to jail, but he faces other charges including in the cash-from-Libya case.
(with AFP)
