Hundreds of women were groped and robbed in a 1,000-strong throng of mostly Arab and North African men outside the main railway station of the western city on the night.
Police have also made seven other arrests over the rampage, but these were all related to thefts and robberies.
The Algerian suspect, 26, was picked up by police Saturday at a refugee shelter, for allegedly groping a female victim and stealing her mobile phone, along with another Algerian asylum seeker, 22, arrested on theft charges, prosecutors said.
Some 883 victims have filed 766 police reports over offences ranging from groping to theft to two reported rapes in Cologne.
The rampage blamed on North African and Arab men has darkened the mood on the refugee influx in Germany, and raised questions on whether Europe's biggest economy will manage to integrate the 1.1 million asylum seekers who arrived in 2015.
