It is understood the singer was detained by police over claims that she had been involved in dealing cocaine in London.
A Met Police spokesperson confirmed the 24-year-old had been released on bail, along with a 35-year-old man, until a date in July.
It was also confirmed two residential properties were searched as part of the investigation.
It comes after The Sun On Sunday reported that Tulisa had boasted to a journalist about her drug dealer connections and introduced the reporter to an alleged cocaine supplier.
"Half my phone book sells it. Of course I can get it for you," Tulisa, 24, is reported to have said - adding that she does not take the drug herself.
"Half the guys I know are drug dealers."
The 35-year-old arrested alongside Tulisa, musician Mike GLC, spoke to the press outside Belgravia Police Station after they were bailed.
"We are innocent. We haven't been charged," he said, claiming that any evidence on camera had been "taken out of context".
"Anyone can edit or chop things together on video," he said.
"The truth will come out in the end. I don't want to go into much more detail. I am going home to be with my family. This is ruining my life.
"I am not a drug dealer. I have never sold drugs in my life."
Tulisa has recently been dropped as a judge by the X Factor and replaced by Sharon Osbourne.
Her spokesman has declined to comment on the situation.