The blaze destroyed sets used in such pictures as "Dick Tracy" and "The Sting" and delayed production of the latest Sylvester Stallone film.
Michael J. Huston, 40, of Tujunga was booked on suspicion of arson at 4 a.m. Wednesday after discrepancies arose in his answers to fire investigators' questions, arson experts said.
Huston, an employee of Burns International Security Services, which contracts to provide security for the studio, was on duty when the fire broke out shortly after 7 p.m. Tuesday.
Authorities had no immediate comment on a motive for the fire.
The suspect's half brother described him as a mentally disabled Army veteran who was incapable of such a crime.
But Huston's grandmother later told a local television station that the suspect told her, "I did it."
Universal officials said 20% of the sets on the sprawling, 420-acre lot--also a popular tourist attraction--were destroyed in the stubborn, wind-whipped blaze. Most of the damage was to wooden facades that burned like matchboxes, Los Angeles County Fire Department spokesmen said.
It took 400 Los Angeles city and county firefighters nearly three hours to extinguish the blaze, which offered an eerie sideshow to Republican Party election-night festivities held at the nearby Universal City Hilton hotel. Firefighters even used water from the studio's Red Sea tour attraction to douse the flames.
Despite the fire--and, in some cases, because of it--tourists flocked to Universal Studios on Wednesday to take the trams that guide visitors by sets that have formed the backdrop of movie classics for decades.
On Wednesday's excursions, tourists could see rubble of what used to be sets from "To Kill a Mockingbird," "The Sting" and "Dick Tracy."
Universal officials said the most serious damage was concentrated on several outdoor sets, including the two-block-long New York Street, Sting Alley, Georgetown Avenue, Warehouse Street and Brownstone Street.
Dan Slusser, general manager of Universal Studios, said it would take about six months to rebuild the sets. He said an estimate of the damage, which parent company MCA said is covered by insurance, would not be available for a couple of days but would be in the "millions, not the hundreds of millions."
The fire also interrupted production of the John Landis-directed movie "Oscar," a comedy starring Stallone, which had been shooting on the back lot only hours before the fire broke out.
The movie's publicist, Spooky Stevens, said the entire set was lost, forcing the crew to shut down production for up to 10 days while looking for a new location to shoot outdoor scenes.
"It's a nightmare, but it's not an impossible nightmare," she said. "We've lost a lot of our wardrobe, all the camera equipment, 21 vintage cars and all of our props."
Replacing costumes and props is complicated, she said, because the film is a period piece, set in 1931, with Stallone playing a gangster who tries to go straight.
Stevens said the production crew had started shooting on the outdoor set last Thursday and had only four or five more days of filming scheduled.
A temporary casualty was the King Kong exhibit, part of Universal's popular studio tour. It was closed Wednesday, but damage turned out to be less than originally believed, studio officials said.