The military said the arrest was ordered by the Supreme Court in connection with a land development case, and multiple violations of the Pakistan Army Act after Mr Hameed's retirement.
The management of a private housing scheme, Top City, had claimed in a petition in November 2023 that Mr Hameed had orchestrated a rain on the offices and residence of its owner.
Their petition claimed that Pakistan Rangers and officials of the ISI raided its premises in May 2017 and took away valuables, including gold and diamond ornaments, over an alleged terrorism case.
General Hameed later told the petitioner that he would return some items except for "400 told gold and cash", reported Dawn quoting the petition.
The petition also accused some former ISI officials of being involved in the "illegal takeover of the housing society".
In March 2024, former Pakistan interior minister Rana Sanaullah said the ex-ISIS boss and his brother were under scanner over alleged corruption.
In April, the military formed an inquiry committee to probe the allegations of misuse of authority against the former spymaster.
Lieutenant-General Faiz Hameed was among six senior-most generals whose name was included in the list of potential candidates for the top two military offices in November 2022, as per Dawn.
Mr Hameed, however, sought an early retirement and sent his resignation to the high command the same month, four months before his retirement date.
He had also faced criticism from Nawaz Sharif and his daughter Maryam Nawaz for allegedly having a role in their convictions.