Maria Ressa said the accusation of "cyber-libel" is an attempt by Rodrigo Duterte's government to silence the publication.
It is the latest in a string of different allegations against her.
The president, who calls the site "fake news", has previously denied charges against her are politically motivated.
Rappler journalists live-streamed the arrest on Facebook and Twitter.
Footage streamed on Facebook showed plain-clothes party officials speaking with Maria Ressa, while several of the site's journalists live-tweeted what was happening.
Officers from the National Bureau of Investigations (NBI) reportedly ordered them to stop filming and taking photos.
Miriam Grace Go, Rappler's news editor, tweeted that NBI agents had led Ms Ressa out of Rappler's offices.
The latest charge against Ms Ressa stems from a seven-year-old report on a businessman's alleged ties to a former judge in the Philippines' top court.
The case comes under a controversial "cyber-libel" law, which came into force in September 2012, four months after the article in question was published.
Officials first filed the case against her in 2017, but it was initially dismissed by the NBI because the one-year limit for bringing libel cases had lapsed. However, in March 2018, the NBI reopened the case.
This arrest comes just two months after Ms Ressa posted bail on tax fraud charges, which she says are also "manufactured".
If she is convicted of just one count of tax fraud, she could serve up to a decade in prison. The cyber-libel charge carries a maximum sentence of 12 years.
Speaking to reporters after her arrest, the veteran journalist said she was "shocked that the rule of law has been broken to a point that I can't see it".
What is Rappler ?
Rappler was founded in 2012 by Ms Ressa and three other journalists.
Since then it has become known in the Philippines for its hard-hitting investigations.
It is also one of the few media organisations in the country that is openly critical of President Duterte, regularly interrogating the accuracy of his public statements and criticising his sometimes deadly policies.
In particular, Rappler has published a number of reports critical of Mr Duterte's war on drugs, in which police say around 5,000 people have been killed in the last three years. In December, it also reported on his public admission that he sexually assaulted a maid.
The president insists that the site's reporting is "fake news", and has banned its reporters from covering his official activities. Last year, the state revoked the site's licence - but Mr Duterte denied that the claims against Rappler and Ms Ressa are politically motivated.
Who is Maria Ressa?
Ms Ressa is a veteran Philipppine journalist who, before founding Rappler, spent most of her career with CNN - first as the bureau chief in Manila, and then in Jakarta. She was also the US broadcaster's lead investigative reporter on terrorism in Southeast Asia.
She has won many international awards for her reporting, and was named a Time Magazine Person of the Year in 2018 for her work holding power to account in an increasingly hostile environment.
What does this mean for journalism in the Philippines?
Press freedom advocates see this as an attempt to bully a critical news organisation into silence.
The National Union of Journalists of the Philippines, for example, has been swift in its condemnation.
"The arrest of... Ressa on the clearly manipulated charge of cyber-libel is a shameless act of persecution by a bully government," the union told Reuters. "The government... now proves it will go to ridiculous lengths to forcibly silence critical media."
Meanwhile, Rappler's reporters have been tweeting about the arrest with the hashtag #DefendPressFreedom.
Observers say that press freedom in the Philippines - once one of the strongest in Asia - has been weakened under Mr Duterte's presidency.
Since 1986, 176 journalists have been killed in the country, making it one of the most dangerous in the world for reporters.
In 2016, the president was criticised for saying some of those journalists deserved to die.
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