The complainant, Casey Cain, told authorities that his house help, identified as Eunice Adhiambo, allegedly gained access to a drawer inside his residence and took the money without permission.
The incident was reported on April 6, prompting detectives from Kilimani to begin investigations.
Following several leads, officers carried out an operation on Friday in Raila Estate within Kawangware, where the suspect was located and taken into custody.
Police said the arrest was made after intelligence linked her to the theft.
During the search at the premises, officers recovered 1,050 US dollars, which investigators believe is part of the stolen funds.
The recovered amount is now being held as evidence as efforts continue to trace the remaining money.
Authorities also found several identification documents in the house, including three identity cards.
Investigators are now trying to determine the ownership and origin of the documents and whether they are linked to other possible incidents.
The suspect has been transferred to officers at the Directorate of Criminal Investigations offices in Kilimani, where she is undergoing processing ahead of her appearance in court.
Police say further enquiries are ongoing to establish whether she acted alone or had assistance from other individuals.
Law enforcement officers have intensified efforts to recover the balance of the missing money.
They have also urged members of the public, especially employers who hire domestic workers, to exercise caution by conducting proper background checks and maintaining clear accountability in the workplace.
Cases involving theft by domestic workers have been reported in different parts of the country in recent years, raising concerns about trust and security within private homes.
Police say continued investigations aim to address such incidents and ensure those responsible are brought to justice.
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