LONDON— Peter Mandelson , the former U.K. ambassador to the U.S., was arrested on Monday on suspicion of misconduct in public office, as the revelations linked to convicted sex offender  Jeffrey Epstein  continue to send shock waves through Britain’s establishment.

The arrest came only days after former Prince Andrew was also detained by police on the same offense. Mandelson, a totemic figure on the left of British politics, was photographed being escorted from a property in London by police officers. Shortly after, the Metropolitan Police confirmed that a 72-year-old man had been arrested and taken to a police station for an interview.

Files released by the U.S. Justice Department appear to show that Mandelson emailed confidential government correspondence to the disgraced financier. They also appear to show that Epstein separately wired $75,000 to Mandelson. Police didn’t comment on what their investigation was focused on.

Mandelson hasn’t responded to requests for comment. He has previously said that he had no recollection or record of receiving the funds and that the payments “need investigating by me.”

The scandal had already rippled through the British political system, forcing the U.K. Prime Minister Keir Starmer to apologize for having appointed Mandelson to the role of U.S. ambassador in 2024 despite his affiliation with Epstein being public knowledge. Starmer’s top aide, who had advised on the appointment, resigned over the recent revelations .

Starmer repeatedly said Mandelson lied to him about the extent of his friendship with Epstein, who pleaded guilty to procuring minors for prostitution in 2008. The debacle sparked a small mutiny in the ruling Labour Party and an abortive attempt to oust Starmer.

Westminster is bracing for the scandal to reignite in early March when the government is due to publish a large batch of internal correspondence in the lead-up to Starmer’s decision to name Mandelson as U.S. ambassador. Police have previously said they had searched two properties linked to Mandelson.

Police forces in the U.K. routinely arrest suspects to bring them in for questioning. That doesn’t automatically mean they are charged with committing a crime. Ex-Prince Andrew was released 10 hours after being brought in for questioning, but police said their investigations would continue. He hasn’t commented publicly on his arrest.

Mandelson was forced to quit as ambassador last year when emails showed that he had remained in conduct with the disgraced financier far longer than previously known. The release of further emails also appeared to show how Mandelson and Epstein communicated about official government business.

In 2009, while he was U.K. business secretary and during Britain’s financial crisis, Mandelson forwarded a confidential government email to Epstein from an aide to then Prime Minister Gordon Brown advising the government to draw down debt by selling some 20 billion pounds of assets, equivalent to about $27 billion if converted today. The heads up of a possible U.K. sale of assets would have allowed Epstein to possibly trade on the information. Epstein replied: “what saleable assets,” to which Mandelson said, “Land, property I guess.”

In May 2010, Mandelson appeared to confirm to Epstein during the height of the eurozone crisis that a €500 billion bailout package was about to be unveiled. “Sd be announced tonight,” he wrote in response to Epstein’s email saying the bailout package was “almost complete.”

Other emails show that Epstein wired three transfers of $25,000 to Mandelson back in 2003 and 2004, when he was a Labour lawmaker. Emails also show that Mandelson’s partner, Reinaldo Avila Da Silva , asked Epstein in 2009 to wire money to cover the cost of his enrollment in an osteopathy-training course. Epstein replied he would wire the “loan amount” immediately.

“You are the only person who knows everything about me,” Mandelson wrote to Epstein in 2009. “Don’t go away.”

Misconduct in public office is defined by the British Crown Prosecution Service as the “serious wilful abuse or neglect of the power or responsibilities of the public office” and can result in life imprisonment. Lawyers say a conviction is difficult to secure.

Write to Max Colchester at Max.Colchester@wsj.com