The Birmingham City striker was held on suspicion of failing to stop at the scene of a road traffic collision following the crash in central London in the early hours of Saturday morning.
Police and ambulance crews were called to Bishops Bridge Road at the junction with Eastbourne Terrace, Paddington, following reports that a car had hit a pedestrian.
A man in his late 40s was taken to a central London hospital, although his injuries are not believed to be life-threatening.
King, 33, was arrested by City of London Police officers and has been released on police bail to a date in mid-September.
A Metropolitan Police spokeswoman said: "A 33-year-old man was arrested by officers from City of London Police on suspicion of failing to stop at the scene of a road traffic collision and taken to a central London police station.
"He has been bailed to mid-September pending further inquiries. Detectives from Westminster are investigating."
A spokesman for Birmingham City said the club was aware of the incident.
King, whose previous clubs include Watford, Middlesbrough and Coventry City, is reportedly available on a free transfer and in talks with other Championship clubs about a possible move.