He has been named as 62-year-old Brian Coulter. Je was discovered in a house at Sandy Braes of Aughrim Road on Monday afternoon.
Police say they have launched a murder investigation and have issued an appeal for witnesses to get in contact with them.
It is understood the man arrested on suspicion of murder was apprehended by police officers at a retail park off the Castledawson Road.
In appeal for information tonight Detective Chief Inspector Raymond Phelan said: “Just after 12.30 on Monday afternoon, (18th October 2021) police received a report that the body of a deceased male had been found at a residential property in the Sandy Braes area.
"Police attended and arrested a man nearby on suspicion of murder who remains in custody.
"I am asking for help from the public to identify sightings and movements of Brian since last Monday, 11th October.
"I am particularly keen to hear from anyone who saw Brian, together with descriptions of anyone who was in his company through to Monday 18th October.”“If you have any information which you think could help, please contact detectives on 101 quoting reference 944 of 18/10/21.”
A report can be made using the online reporting form on the PSNI website or via Crimestoppers anonymously on 0800 555 111 or online at www.crimestoppers-uk.org
Mr Coulter was known to many in his home town of Magherafelt and his death has shocked the community.
Second death within a week
The death is the second to have shocked the Magherafelt district within the past week.
Mother of six Katrina Rainey died in hospital last Tuesday after being pulled from a burning car outside her home in Knockloughrim.
Her husband, Thomas Rainey, appeared at a special court in Dungannon at the weekend accused of her murder.
Mid Ulster SDLP MLA Patsy McGlone said he had attended the Rainey School in Magherafelt with Mr Coulter.
He is concerned about the increase in crime in South Derry and is requesting a meeting with local police to discuss the situation.
“My thoughts are with the family and friends of this man who are receiving the worst news imaginable today,” he said.
“Magherafelt is not an area that is used to this kind of crime so to see two murder investigations launched in the wider area in a week has been very shocking for the local community.”
“People will be rightly concerned at the recent rise in violent crime and I will be liaising with police to discuss how they intend to combat this issue,” he said.
“One incident is too many and we must do everything we can to reassure local people and others that this is a safe and welcoming area.”
DUP Mid Ulster MLA Keith Buchanan extended his sympathies to the family and friends of Mr Coulter.
Mr Buchanan said: “My thoughts are with the family and neighbours who are now mourning the loss of a loved one or neighbour.”
Mid Ulster District Council chairperson DUP Councillor Paul McLean described Monday’s incident as a “tragedy which has plunged a family into grief.”