The 38-year-old is currently in police custody being questioned by detectives.
She is the second woman to be arrested on suspicion of murder in connection with the incident after a 33-year-old was earlier released under investigation.
The arrests come after the body of a man, aged in his 70s, was discovered in a flat in Low Road on Boxing Day at 12.20pm.
Formal identification has not yet taken place but the man’s family has been informed.
A South Yorkshire Police spokesperson said: "The investigation is ongoing and police are keen to hear from anyone who may have witnessed suspicious activity in the Low Road area, or who believes they may hold information that could help officers.
"Please call 101 quoting incident number 321 of 26 December, or pass information to Crimestoppers anonymously by calling 0800 555 111."