The International Crisis Group said it was "aware of reports" of Michael Kovrig's detention.
Prime Minister Trudeau said Canada is in direct contact with Chinese authorities concerning the case.
The news comes days after Canada arrested a top executive of the Chinese telecoms giant Huawei.
Mr Trudeau said the case is being taken "very seriously". Canada's foreign affairs ministry gave no further details about the incident or its talks with China.
Tensions between Canada and China have been high over the arrest of Meng Wanzhou, Huawei's chief financial officer and daughter of its founder, on Saturday 1 December.
Federal public safety minister Ralph Goodale told journalists in Ottawa that the government is "deeply concerned by the situation".
The minister said there is currently no "explicit indication" of any link between her arrest and Mr Kovrig's reported detention.
Mr Kovrig had previously worked as a diplomat in Beijing, Hong Kong and at the UN in New York.
Mr Kovrig has been working since February 2017 as North East Asia senior advisor for the International Crisis Group, a Brussels-based think tank that focuses on conflict reduction research.
He worked with Canada's foreign affairs ministry between 2010 and 2016 and was posted in Hong Kong and Beijing between 2012 and 2016.
Ms Meng faces extradition to the US on charges of fraud related to sanctions-breaking business dealings with Iran.
She could be jailed for up to 30 years if found guilty.
China has demanded that Canada release Ms Meng or face consequences.
On Tuesday, she was granted bail by a Vancouver judge after a three-day court hearing.
Bail was set at C$10m (£6m; $7.4m) in cash and collateral.
The judge said that Ms Meng would be under surveillance 24 hours a day and must wear an electronic ankle tag. She will be unable to go out between 2300 and 0600 and must surrender all passports and travel documents.
She must return for her next court hearing on 6 February.
