The 28-year-old was detained after swearing at officers having emerged from a nightclub in Chelsea, west London, in the early hours, sources said.
He was taken to a police station to sober up.
The footballer, who is paid £82,000 a week, was held for three hours and then issued with an £80 fixed penalty notice for being drunk and disorderly and allowed to go home.
Cole had spent a night drinking at the Collection bar and restaurant in Brompton Road, Chelsea, and had earlier been pictured at a nearby charity event with ex GMTV presenter Fiona Phillips.
The club's website says it is an "upmarket" bar offering "fantabulous cocktails and a stylish crowd of twenty-somethings".
The incident will be another embarrassment to Cole's wife, Girls Aloud singer and X Factor judge Cheryl Cole.
She is currently climbing Mount Kilimanjaro in Tanzania with a number of other celebrities in aid of Comic Relief.
Her marriage to Cole was put under strain last year over allegations of his infidelity.
Chelsea's new manager, Guus Hiddink, is a disciplinarian who will be unhappy that one of his top players was caught drunk three days before they face Coventry City in the FA Cup.
A Scotland Yard spokesman said: "At about 2.15am today, a man was arrested in Brompton Road, South Kensington, on suspicion of being drunk and disorderly and taken to a central London police station where he was later issued with a fixed penalty notice for being drunk and disorderly and released at 5.37am."
Source: Telegraph