Russia's domestic security agency (FSB) said on Tuesday it had detained Estonia's consulate general in St Petersburg for receiving classified documents from a Russian citizen.
This activity was not in accord with the diplomat's work in Russia and had "a manifestly hostile character toward the Russian Federation," the Federal Security Service, known by its Russian acronym FSB, said.
No information about the nature of the documents was provided.
The FSB is the main successor agency of the Soviet KGB and is responsible for counter-intelligence at home.
A spokesperson for the Estonian Foreign Ministry confirmed the arrest.
The accusations against the diplomat were fabricated and completely unfounded, the spokesperson told Estonian radio, adding that the incident is another example of Russia's lack of interest in constructive relations with its neighbours.
Earlier this year Russia expelled Estonian diplomats in response to Estonia's expulsion of Russian diplomats.