The veteran campaigner was led away by police shortly after unfolding a poster that said President Vladimir "Putin fails to act against Chechnya torture of gay people" near Red Square in central Moscow.
"There can be no normal sporting relations with an abnormal regime like that of Vladimir Putin," he said before being approached by three officers.
Tatchell told one of the officers he was demonstrating on behalf of the Russian people and said a number of celebrated Russians, such as the composer Pyotr Tchaikovsky, were gay.
After a brief discussion about the legality of the protest, the 66-year-old was escorted to a police car next to the walls of the Kremlin.
Tatchell has been to Russia several times to protest for LGBT rights and has twice been arrested in the country.
In 2007, he was beaten by rightwing demonstrators as he attended Moscow's second-ever gay pride parade, in an attack he says has left him with brain damage.
Last year gay men in Chechnya, a majority Muslim republic in southern Russia ruled by strongman Ramzan Kadyrov, said they had been tortured by law enforcement agencies.
A controversial "gay propaganda" law brought in by Russia in 2013 officially forbids the promotion of "non-traditional sexual relationships" to minors but effectively bans gay rights activism.
Tatchell said the law had been used to criminalise peaceful protests, sack teachers and suppress organisations that offer support to the LGBT community, in a written statement released to the media.
Russian campaigners have previously been charged for sharing information about LGBT rights on social media and detained for carrying rainbow flags at demonstrations.
Russian authorities have insisted lesbian and gay fans should feel safe travelling to the country for the World Cup, but some LGBT supporters told AFP they had received violent threats ahead of the tournament.
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