The arrest came after an incident involving a woman at a Croydon hotel on Saturday night.
He was bailed until January, pending further inquiries.
In a statement, Notts County said: “Notts County can confirm that the club are aware of an alleged incident involving one of our players at the team’s hotel on Saturday, 3 December.
“As this is a police matter, the club will be making no further comment on this incident.”
The team was staying at the hotel on Saturday night, prior to their match against Sutton United on Sunday evening.
It is understood that Hughes, who has previously played for Premier League West Bromwich Albion, Coventry City and Oldham, denies the woman’s allegation.
Hughes, who has played for Notts County since 2009 after leaving Oldham Athletic, had his contract at the club extended in October by another 18 months.