The 41-year-old suspect was among the mostly Syrian people who were brought safely to shore on Thursday evening after patrol vessels responded to a distress call off the island's west coast.
He appeared in court on Friday and was remanded in police custody for eight days on suspicion of migrant smuggling and helping third country nationals enter the island illegally.
Police said the boat had left the Turkish coastal town of Alanya for Cyprus on Tuesday but had run out of fuel.
The Turkish captain, who had been paid €2,000 ($2,200) a head for the voyage, had abandoned ship, the refugees said.
The 27 passengers -- 18 men, six women and three children, all said to be in good health -- are being cared for at a reception center outside the capital Nicosia.