The aide, who was not immediately identified, was reportedly stabbed at least 10 times.
Liberal Democrat lawmaker Nigel Jones, 51, suffered cuts to his hands and arms and was taken to a hospital in Cheltenham, about 100 miles northwest of London. He was not seriously injured.
The party said it knew of no motive for the attack and Jones had not received any threats beforehand.
But local councilor Alexis Cassin, also a Liberal Democrat, said she understood Jones had been dealing with a difficult case involving the alleged attacker, although she did not know the details of the case.
Cassin said she believed there were at least three people in the room at the time of the attack.
Cheltenham police refused to confirm the type of sword. But witnesses speaking to the British Broadcasting Corp. said it was similar to one used by a Japanese Samurai warrior, though they did not offer any description of what that meant. The witnesses also said the suspect "went crazy" in the lawmaker's office before he was chased up the street, still carrying the weapon.
Police would give no details about the attack, but said a 49-year-old local man was arrested near the party's headquarters and brought in for questioning.
Councilor Brian Cassin, husband of Alexis Cassin, said the lawmaker and his assistants had been preparing for their regular Friday night office hours when they were attacked.
"MPs do have a problem with angry, aggrieved people. Mr. Jones and his assistants work very hard to deal with casework but you can't win them all.
"I have heard he was dealing with a bit of this man's work. They were trying to help this man before tonight," he said. "These people are here out of public duty to help."
Graham Norton said his neighbor, David Copson, had held the party aide in his arms and tried to resuscitate him.
"He tried his best to save this man and gave him mouth-to-mouth, but he said there was a hole in the man's stomach," Norton said.
Home Secretary Jack Straw offered condolences to the victim's family.
"Members of Parliament of all parties in this country are very accessible to their constituents and this makes this tragedy all the more dreadful," Straw said.
Jones won the Cheltenham seat in 1992 and has been the party's spokesman on local government and housing, science and technology, consumer affairs and culture, media and sports.
The Liberal Democrats are Britain's second-largest opposition party.