He was one of five arrested on suspicion of professional negligence in connection with the death of a truck driver two years ago.
Kawasoe headed Mitsubishi until 4-years ago. In 2000 he resigned after hidden safety records were uncovered detailing undeclared vehicle defects.
In a statement, the restructured motor manufacturer said it takes this matter very seriously and intends to co-operate fully in the investigation into the accident.
It is the second bout of arrests to involve Mitsubishi executives in a matter of weeks. Last week, several Mitsubishi executives were arrested in connection with the death of a woman who had been hit by a wheel which came off a Mitsubishi Fuso truck in 2002.