The cleric, Shabbir Ahmed, last Monday told worshippers at a village mosque that those who love the Prophet Mohammad (PBUH) always say their prayers, before asking who among the crowd had stopped praying, according to local police chief Nausher Ahmed.
Mohammad Anwar, 15, raised his hand by mistake after apparently mishearing the question.
Ahmed then accused the boy of blasphemy, according to local media.
Anwar fled home, where he cut off the hand he had raised and placed it on a plate before presenting it to the imam, according to police chief Ahmed.
The cleric was arrested late Saturday and would appear in court on Monday “for further legal proceedings”, Ahmed added.
“Shabbir Ahmed, the cleric, has been arrested and booked under anti-terror law for inciting the boy to take such an extreme step,” Ahmed told AFP from Hujra Shah Muqeem district, some 125 kilometres (77 miles) south of Lahore in Punjab province.
Faisal Rana, a senior police official, confirmed the arrest.