Authorities said Joseph Reese, 45, molested the boy, who was six at the time, while living with the family. Reese is being held on $100,000 bail.
The arrest came four days after two of the boys were found burned and malnourished in a locked basement room in Newark. The next day, investigators located the body of the third boy in a plastic storage bin.
The three boys were in the care of their mothers' cousin, who is the target of a nationwide search.
In a related development, New Jersey state officials disputed union claims that a social worker was severely overworked while monitoring the boy who was later found dead in the storage bin.
The unidentified caseworker was responsible for 53 children in 27 families, said Micah Rasmussen, a spokesman for Gov. James E. McGreevey.
Union leaders had claimed the worker was responsible for 107 cases, and they disputed the state's number.
"We believe it was many more than that," said Hetty Rosenstein, president of Communication Workers of America Local 1037.
Rosenstein had offered the higher number Tuesday, saying the union hoped the caseworker and her supervisors would not be made scapegoats in the death of Faheem Williams.
"You're talking about a really besieged work force. You can't say much more than that," Rosenstein said then. "When you have 107 children on your caseload, you might not do all the collateral calls. Nobody can do this job."
The average caseload in New Jersey is 35 children. National advocates recommend that a worker handle no more than 25.
An autopsy concluded that Faheem, who was found in the home of his mother's cousin, Sherry L. Murphy, died from starvation and blunt force to the stomach. The death was ruled a homicide. No one has been charged in the death.
Authorities were still searching for Murphy, a 41-year-old go-go dancer, who is charged with child endangerment.
The children had been in Murphy's care since their mother, Melinda Williams, was jailed on assault charges in March. Williams, who remained hospitalized Wednesday as she recovered from a car wreck, was released from custody in August but told police she hadn't been able to find Murphy or the children.
Faheem's twin, Raheem Williams, 7, and another brother, Tyrone Hill, 4, also remained hospitalized Wednesday and were in fair condition. The brothers have been placed in state custody pending placement in a foster home.