"I will continue to highlight inefficiency of the government through my cartoon. I will not stop," said Bala G, who had drawn the cartoon blaming the AIADMK government for the death of four members of a family last month.
The Palaniswami government has defended the arrest, saying the cartoonist had "gone too far".
But opposition political parties in the state and elsewhere called his detention an attack on free speech, aimed at sending a message to the government's other critics as well.
Bala was arrested from his Chennai house for a caricature posted on his Facebook page last month that showed Chief Minister Palaniswami standing with the Tirunelveli collector and police chief, all three without clothes, watching a child burning.
"The three persons are depicted as naked and carrying currency notes which are used to cover their private parts," the police complaint said, calling the cartoon "derogatory, demeaning and malicious".
Isaki Muthu had borrowed money from a private money lender and had been unable to get out of debt due to the high interest rates. Tamil Nadu has a 2003 law against loan sharks but the district officials and police refused to invoke it to save him.
Everyone got into action after the widely-reported suicide by the family. The loan shark was arrested and Chief Minister Palaniswami urged people to complain. But no one has been punished for not helping Isaki Muthu.
Tamil Nadu's lead opposition party DMK has called the cartoonist's arrest "proof that the government was in the wrong" and unable to respond to Bala's criticism. "What has happened is a great shame", said DMK leader TKS Elangovan.
The Congress' Sandeep Dikshit wondered if people don't question the government's leader, "then who will they question". MDMK chief Vaiko described the arrest as a reflection of "a fascist government" while the Communist Party of India's D Raja demanded that the Tamil Nadu government withdraw all cases.