The chief suspect in the Parsons Green bombing was seen being interrogated by two unarmed police officers moments before his arrest in Dover.
Tourist Daniel Vaselicu, 31, had been sitting with a friend in the waiting area at the ferry hub when he saw the man being approached by officers at 7.30am on Saturday.
The departure area was empty apart from the individual, who was said to be young and light-skinned, but not English, the Romanian baker said. He appeared calm as the officers interrogated him for 10 minutes, leading Mr Vaselicu to believe he was simply homeless.
Moments later, after Mr Vaselicu had left for a coffee and a cigarette, the officers arrested the 18-year-old, who police believe planted the bomb on a packed District Line train on Friday.
A massive counter-terrorism operation then erupted, which saw the ferry terminal evacuated as a precaution.
Mr Vaselicu, who was forced to hang around the area after his car was seized on his way into Britain, told the Press Association: "We were in the seating area at the terminal, the police were interrogating this guy for around 10 minutes. It was around 7.30am, he was young, around 25 or under.
"He was white, not Arabic, but he wasn't English - there was only one person there.
"Then we went to the town centre, I wanted to smoke a cigarette and have some coffee, my opinion was that he was a homeless guy and that's why they were interrogating him. He was looking normal, not fighting or worried, concerned."
Scotland Yard said the teenage suspect was detained at around 7.50am by Kent Police on suspicion of preparing a terror act.
The arrest was hailed as "very significant" by both Home Secretary Amber Rudd and Deputy Assistant Commissioner Neil Basu.