The male teenager was held after allegations of sexual assault were made at Jack and Jill's Childcare in Torquay, Devon, in July this year.
Devon and Cornwall Police immediately launched an inquiry with the suspect being arrested and released under police investigation while inquiries continue.
Bail conditions exclude the teenager from the immediate vicinity of the nursery and police said he had since left the Devon and Cornwall force area.
Detectives have contacted over 100 families whose children would have attended the nursery during the investigation period. It is understood around dozen families may have been directly affected.
Rivelin Valley Road Sheffield: Body found after police search of Rivelin Valley
The Long Blondes: Leadmill cancel gig after allegations surface against band creator Dorian Cox
Chesterfield Road Sheffield: Man who spent 12 hours on roof is sentenced in court for affray and harassment
Yorkshire Water announces hosepipe ban as Government prepares to declare drought in UK
Chapeltown Sheffield rape investigation: 16-year-old arrested over assault of girl, 13, is bailed
After the inquiry was launched, police uncovered "a number of concerns around safeguarding matters" and on October 24 Ofsted suspended the nursery's licence.
By Press Association