Nine people were injured in the attack.
Unlike in other major cities, New Year in Tokyo is a relatively muted affair.
At least nine people were injured, one seriously, when a auto deliberately plowed into crowds celebrating the New Year in central Tokyo in the early hours of Tuesday morning. He is suspected of intentionally trying to kill people by driving the vehicle into them in the street.
Police spokesman Satoshi Mishima said a 21-year-old man had been arrested, but said police were still investigating the precise motives behind the attack.
"I saw some guys collapsed on the street. By the time I reached the exact place, paramedics were already there helping people", he said.
Japanese police said a ninth person was injured after Kusakabe got out of his vehicle and punched him.
The street was closed to vehicular traffic at the time as it was expected to be crowded on New Year's Eve and New Year's Day. When apprehended by police, the man declared that he had carried out a terrorist attack.
But police said they were still investigating whether the man was actually connected to the doomsday cult.
Witness Sam Clack, 38, a BBC radio producer, said: "I just heard this most blood-curdling scream and looked down the platform". "It was very very scary", Clack said.
The blast, which destroyed 35 units, killed at least seven people and left hundreds homeless in freezing temperatures.