Amid tight security, the legislator was brought to the rural police station in Nirmal, about 200 km from Hyderabad, at 10 pm. There was tension near the police station as some legislators staged a protest when they were not allowed to proceed towards it. Police arrested two legislators for violating prohibitory orders.
Police officers began questioning Mr Owaisi with regard to the speech delivered by him at a public meeting in the town on December 22. He was accompanied by his younger brother Burhanuddin Owaisi, editor of Urdu daily 'Etemaad' and his lawyer.
Mr Owaisi, to be produced before a magistrate later, is likely to be lodged in a sub-jail in the town.
MIM workers tried to stop the convoy carrying Mr Owaisi near the town but were dispersed by the police. The protesters raised slogans against Andhra Pradesh Chief Minister Kiran Kumar Reddy.
Nirmal turned into a fortress with cops deployed across the town to prevent any untoward incident. Some leaders of MIM and Bharatiya Janata Party (BJP) were arrested as a precautionary measure.
Prohibitory orders banning assembly of five or more people were imposed in Nirmal and several other towns in the district as also in Nizamabad, where the MIM leader is facing another case.
Earlier, Mr Owaisi was taken into custody after being subjected to a series of medical tests at the government-run Gandhi Hospital in Hyderabad through the day to ascertain if he was fit to face questioning.
He had, on Monday, sought four days' time to appear before police in Nirmal and Nizamabad towns in connection with cases booked against him on January 3 for allegedly delivering hate speeches last month.
The legislator, who returned from London early on Monday, faces charges of waging or attempting to wage war against the state, promoting enmity between different groups on grounds of religion, and for deliberate and malicious acts intended to outrage religious feelings.
The 42-year-old heads the MIM in the Andhra Pradesh assembly. Representing Chandrayangutta constituency in the Old City of Hyderabad for a third time, he is the younger brother of MIM chief and MP Asaduddin Owaisi.
The younger Owaisi's alleged remarks against a particular community sparked widespread protests by the BJP and its frontal groups across the state.
Their activists and supporters also filed a series of complaints against him in several police stations.
Security was also beefed up in the old city of Hyderabad and other parts of the state capital. Police and paramilitary forces were deployed.
The legislator underwent 11 tests, and medical reports revealed that he was fit to face investigation.
His lawyer, though, alleged that he was not given the reports. He criticised the police's attitude towards Mr Owaisi who was found to suffer from hernia and pain due to a bullet embedded in his body.
The legislator was shot and critically injured by his rivals at Barkas in his constituency in May 2011.
Earlier, tension prevailed outside the hospital with hundreds of MIM workers reaching there to show solidarity with their leader.
Some pelted stones on buses and other vehicles, leading police to use force to disperse them. Cops sealed off all routes leading to the hospital.
Mr Owaisi, on Monday, moved the Andhra Pradesh High Court, seeking orders to restrain police from arresting him.
He also pleaded that police be directed not to book further cases. The petition is likely to come up for hearing on Wednesday.