Police in the town of Wimpassing in the province of Lower Austria made the arrest shortly after the Wednesday night slaying, and said the suspect -- described only as a 76-year-old native Turk -- did not resist.
Officials said witnesses claimed the man allegedly shot the victim, a 58-year-old Turkish-born man, in the street with a 12-gauge shotgun at point-blank range and then cut off his penis with a kitchen knife, leaving him to bleed to death.
Two teams of surgeons worked at the scene to save the man but were unable to revive him, authorities said.
Investigators believe the suspect apparently was jealous that the younger man had flirted with his wife, and had sought him out as "a question of honor," said Franz Polzer, head of the region's criminal investigations office.
Honor killings, driven by the view that a family's honor is paramount, are an ancient tradition associated with Kurdish regions of Turkey, Iraq and Iran as well as tribal areas in Pakistan and some Arab societies.
The suspect initially fled into a nearby house after the slaying, but witnesses alerted police to his location and he walked out and surrendered shortly thereafter, Polzer said.
Police said the man appeared to have purchased the shotgun earlier on Wednesday. They said he had disposed of the knife, but led officers to the spot where he stashed the weapon.
Polzer told the Austria Press Agency that the suspected gunman told investigators he suspected the victim of having had an affair with his wife for the past 20 years. The suspect said he had warned the victim a decade ago to break it off.
During questioning, the suspect showed no remorse and instead expressed relief "that he preserved his honor," officials said in a statement.
It was the first known attack of its kind in Austria, which is home to about 200,000 Turks -- Europe's third-largest Turkish expatriate population after Germany and France.
But so-called honor killings have occurred elsewhere in Europe:
- In August, a federal court in Germany ordered a retrial for two brothers acquitted of fatally shooting their sister -- an attack that prosecutors said was meant to punish the Turkish-German woman for her Western lifestyle.
- In Britain in July, the father and uncle of an Iraqi Kurd woman who was murdered for falling in love with the wrong man were sentenced to life in prison for ordering the killing.
- In 2006, a Danish court sentenced a Pakistani man to life imprisonment for ordering the slaying of his 19-year-old daughter, who was gunned down two days after her wedding because her family allegedly disapproved of her choice of husband.