"She was arrested last night following credible inputs from the intelligence sources", Additional Director General of Police Munir Khan said.
"We had an input about a suspect".
"We will be talking to her and our sister agencies and cover every other lead to know what the facts are".
Central intelligence agencies had alerted the J&K police that a woman from Pune had moved to Kashmir and was in regular touch with the Islamic State group, unidentified officials said.
On January 24, a message circulated from the office of Inspector General of Police (Kashmir) to all district police heads and chief of security wing in Kashmir said "there is a strong input" that an 18-year-old woman non-Kashmiri woman might "cause a suicide bomb explosion" near or inside the Republic Day parade in Kashmir.
The local government in Indian-controlled Kashmir on Friday organized official functions to mark India's 69th Republic Day. The ATS later sent her for a "deradicalisation programme".
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Security forces have been deployed in strength at strategic locations in the city.
Eyewitnesses told GNS that all the roads leading to Stadium, the venue for Republic Day celebrations in Srinagar, were sealed by security men till the function was over.
"They (militant outfits) are trying hard to get youth especially some educated youth into militancy but we are countering it the way we have to", he said.
Indian paramilitary troopers take part in a parade during India's Republic Day celebration in Srinagar, the summer capital of Indian-controlled Kashmir, Jan. 26, 2018.
Barricades were erected by the forces with pedestrian and vehicle movement only allowed after thorough frisking and questioning.