The suspected Islamic State militant is believed to have been involved in the killings, which took place on a beach in the city of Sirte.
According to chief prosecutor Al-Sadiq al-Sour, officials have also located the site where victims of the incident 2015 were buried.
Documented in a gruesome video released online by IS extremists, the beheadings stunned Egypt and prompted the country to launch airstrikes targeting extremists in Libya.
The victims of the killings were abducted during two raids on Sirte in late December 2014 and early January 2015, when the city was a stronghold for Islamist extremists.
Since the defeat of IS last year to a United Nations-backed government in the capital Tripoli, hundreds of militants are believed to have fled Sirte, heading inland.
Pictures: Islamic State in Iraq and Syria