The head of the International Monetary Fund, Dominique Strauss-Kahn, has been charged by New York police over an alleged sex attack on a hotel maid.
Mr Strauss-Kahn, 62, was taken off an Air France plane at JFK airport just minutes before it left for Paris.
Police say he faces three charges, including attempted rape. His lawyer told Reuters he would plead not guilty.
The married former French finance minister is also considered a possible Socialist candidate for the presidency.
The BBC’s Hugh Schofield, in Paris, says Mr Strauss-Kahn has been riding high in the polls and was seen as having a genuine chance of beating President Nicolas Sarkozy.
However, this incident is likely to kill off any chance of electoral success, Hugh Schofield says.
Mr Strauss-Kahn is expected to appear before a New York state court later on Sunday, Reuters reports.
He had been scheduled to meet German Chancellor Angela Merkel on Sunday, but that meeting has now been cancelled, reports say.
On Monday he had planned to attend a meeting of European Union finance ministers in Brussels on Monday to discuss the bailouts of Portugal and Greece.
Correspondents say his detention is likely to complicate ongoing efforts to stabilise the finances of struggling eurozone member states.
In a brief statement posted online on Sunday, an IMF spokeswoman acknowledged Mr Strauss-Kahn’s arrest and said the organisation would not comment on the case.
“The IMF remains fully functioning and operational,” she added.
Dominique Strauss-Kahn’s arrest unfolded in dramatic fashion as he was poised to fly to Europe.
A spokesman for New York’s Port Authority said they detained Mr Strauss-Kahn at JFK airport at the request of the New York Police Department (NYPD).
NYPD spokesman Paul Browne told the BBC Mr Strauss-Kahn had been charged with a criminal sexual act, attempted rape and unlawful imprisonment relating to an incident involving a 32-year-old woman.
The Frenchman stands accused of a sexual attack on a maid at a Manhattan hotel.
Mr Browne said the allegations had been made by a 32-year-old woman who worked at the hotel, which has been identified as the Sofitel near Times Square.
“We received a call that a chambermaid in a hotel in midtown Manhattan had been sexually assaulted by the occupant of a luxury suite at that hotel, and that that individual had fled,” Mr Browne told the BBC.
“The maid described being forcibly attacked, locked in the room and and sexually assaulted,” he said.
By the time police worked out that occupant of the room – described by the New York Times as a luxury suite costing $3,000 per night (£1,900) – was Mr Strauss-Kahn, the IMF chief was on board an Air France plane at John F Kennedy airport, about to depart for Paris.
“Our detectives requested of the airport authorities that they stop the plane from leaving, went to the airport and took him into custody,” Mr Browne said.
“If our officers had been 10 minutes later he would have been in the air and on their way to France.”
The woman has been treated at hospital for minor injuries, said Mr Browne.
He said Mr Strauss-Kahn appeared to have left the hotel “in a hurry”, leaving his mobile phone and other personal belongings behind.
‘Error of judgement’
Mr Strauss-Kahn ran for leadership of the French Socialist Party in 2006 but lost to Segolene Royale.
He was appointed managing director of the IMF the following year.
Mr Strauss-Kahn has won praise for his stewardship of the IMF, which he has guided through difficult times including the recent world financial crisis.
But in 2008 he was investigated by the IMF board over his relationship with a female member of his staff.
The board ruled his actions “reflected a serious error of judgment” but that the relationship had been consensual. He apologised to IMF staff and his wife, French TV personality Anne Sinclair.
Mr Strauss-Kahn has not yet announced whether he intends to run in the 2012 French presidential elections, but had widely been expected to do so.