A 45-year-old man has been arrested on suspicion of the murder of Melanie Hall, 25, who went missing in 1996 in Bath.
He was held on Thursday and remains in custody for questioning, Avon and Somerset Police said.
The 25-year-old university graduate was last seen sitting on a stool near the dancefloor in Cadillacs nightclub in Bath, in the early hours of June 9 1996.
Her remains were found 13 years later in vegetation next to the northbound slipway of junction 14 on the M5 and police were able to recover DNA evidence from an item found at the scene.
Earlier this month, on the 20th anniversary of Miss Hall's disappearance, her parents Steve and Pat Hall, made an appeal for information and offered £50,000 of their own money as a reward.
"We believe we're in touching distance of a significant breakthrough and feel it's the right time to offer a substantial reward to encourage someone to come forward with information," Mr Hall said.
"Someone may have been wavering over whether to provide information for a long time. This amount of money is life-changing and I hope it will provide the incentive for them to do the right thing."
Mr Hall said that the family believed the DNA evidence or information from the public would be key to solving his daughter's murder.
There have been nine arrests in connection with her murder since the investigation began but no-one has ever been charged.