Michaella McCollum Connolly, 20, was arrested alongside a 19-year-old British woman on Tuesday in Lima boarding a plane bound for Madrid.
Ms McCollum Connolly, and Melissa Reid, from the UK, are being questioned in connection with the discovery of more than 11kg of cocaine in food products in their luggage.
Diplomats have confirmed that they are helping a British and an Irish woman arrested in Peru over alleged drug trafficking offences.
The Foreign Office in London confirmed it was helping a British national.
"We are aware of the arrest of a British national in Peru this week and are providing consular assistance," a spokeswoman said.
Ireland's Department of Foreign Affairs said it was also providing consular assistance to the family of an Irish woman being held in Peru on suspicion of drug trafficking offences.
Originally from Dungannon, Co Tyrone, Ms McCollum Connolly had been working as a nightclub hostess in Ibiza.
Her family launched a major online missing person campaign after she had not been heard from in 12 days.