He was apprehended after DNA samples picked from the girl's body matched his.
Police said that Ali was familiar with the minor's family and would frequently visit her house.
"The accused was apprehended as a suspect in a door-to-door raids", said the officer who spoke on the condition of anonymity.
The brutal rape and killing of Zainab has unleashed a wave of revulsion around Pakistan, revealing a string of child abductions and killings by a suspected serial predator and generating outrage at a culture of silence surrounding sexual abuse.
A number of police officials have been transferred out of Punjab for failing to investigate complaints of missing children since 2015, when authorities uncovered what they said was a pedophile ring linked to a prominent local family. The sister said that the suspect should be given an exemplary punishment.
DNA testing and polygraph test proved that Imran was the culprit behind the horrific rape and murder of the minor girl, he said.
The Punjab Chief Minister said that he had been informed about the DNA profiling test earlier and the subsequent match with Imran.
DNA sample of Muhammad Imran, who raped and murdered seven-year-old Zainab in cold blood, was a hundred percent match with the DNA samples found at the crime scene.
A few days later, her body was recovered from a trash heap.
The reports said that she was abducted outside a religious institution where she had gone for her Quranic studies on January 4. He said all details would be shared with the media then.
A police district official told: 'The suspect's name is Imran and he lives in the same [area] where Zainab lived.
"I want Imran Ali to be hanged publicly". Television footage showed a contingent of police in riot gear deployed to secure the surrounding area. She said he used to get possessed by djinns.
The accused is a resident of Kot Road, which is situated some 200 metres away from Zainab's home while the place where the body of minor Zainab was recovered is 300 metres away from the residence of the accused. "Sometimes he would keep a beard, sometimes he would wear spectacles, and he would change his clothes", Khan said, adding that a detailed forensic report of the suspect would be available on Tuesday evening.