Mr Tatchell was detained for what Russian police described as an illegal protest as he took part in a solitary demonstration near the Red Square to bring attention to human rights abuses against gay men in Chechnya.
Moscow Police said that he has now been released after being charged with breaking the law on public meetings.
A spokesperson for the UK’s Foreign Office told Sky News: “We are concerned to learn that Peter Tatchell was arrested in Moscow. Consular staff have spoken to Mr Tatchell and have confirmed that he has been released.”
A Reuters reporter who saw the arrest said a Russian policeman informed Mr Tatchell that it was illegal to hold protests during the tournament.
Mr Tatchell was holding a sign which said: “Putin fails to act against Chechnya torture of gay people.”
The policeman told Mr Tatchell that he had to cease or he would be detained. After what was described as a “long conversation”, Mr Tatchell was led away to a waiting police car.
According to the campaigner’s official Twitter account, he was taken to Tverskaya police station.
In a statement, Mr Tatchell said: “I am required to appear in court on 26 June for violating Federal Law 54 and Presidential Decree 202, which prohibit all protests near the Kremlin and during the World Cup.
“I have written a letter to the Chief of Police of Kitay-Gorod police district, requesting that my court appearance is voided on the grounds that I am flying back to the UK on 18 June.
“I have been told I will be free to leave Russia on that date as planned.”
Upon his release, Mr Tatchell’s official Twitter account said his team had spoken to the consulate general who says that the campaigner had been bailed and treated well.
“I spent one hour and 40 minutes in police custody, from the moment I was detained near the Kremlin to the moment of my release from the police station,” he wrote.
“Senior officers were stern but the apprehending officer very helpful, friendly and polite.
“I presume I was well treated, partly because I am a UK citizen and because a senior British embassy consular official, Colin Wells, contacted the police.
“I guess the Russians also did not want to be seen as being heavy-handed during the World Cup.”
Speaking before the protest, Mr Tatchell suggested he anticipated being arrested having been attacked several times while protesting homophobia in Russia.
“I was exercising my lawful right to protest, under the Russian constitution, which guarantees freedom of expression and the right to protest in Articles 29 and 31,” he said.
“A one-person protest, which is what I did, requires no permission from the authorities and the police.
“Getting arrested is standard for Russians who protest for LGBT+ rights or against corruption, economic injustice and Russia’s annexation of Crimea and its bombing of civilians in Syria,” Mr Tatchell added.
He said: “Unlike brave Russian protesters, I have the ‘protection’ of a British passport, which means I have been treated more leniently than they are.
“My fate was mild compared to what often happens to Russians who dare to challenge the Putin regime. I am awed by their courage.”
Last year, the Novaya Gazeta newspaper reported that more than 100 gay men have been locked up and tortured in a homophobic campaign in the Russian republic of Chechnya.
At the time, Sky News interviewed a man who told us how he was forced to flee Chechnya after police turned up at his home looking for him.
Chechen leader Ramzan Kadyrov denies claims that gay men are killed in his country, claiming that no gay men even exist there.