The man, 45, was charged with making a false statement about a threat to damage a plane and not complying with cabin crew's safety instructions, the Australian Federal Police said in a statement.
The offenses carry a maximum penalty of 10 years imprisonment and a fine of over A$15,000 ($9,730).
Flight MH122 left Sydney on Monday afternoon for Malaysia and returned to Sydney about three hours later after the passenger "allegedly became disruptive" during the flight, police said.
Passengers and crew were evacuated from the plane once it was deemed safe and the man was arrested without incident. He is expected to appear in court on Tuesday.
Police did not specify the nationality of the man though they said he is a resident of Canberra.
Thirty-two domestic flights were canceled and other domestic flights delayed by up to 90 minutes due to the incident, Sydney Airport said. There were no international flight cancelations.