The 35-year-old man was charged with four counts of murder in the Friday morning blaze at his workplace in suburban Quakers Hill, Homicide Squad Detective Superintendent Michael Willing said.
The man can be named after he appears in a Sydney court later Saturday.
Willing would not give details of the suspected motive for the crimes. Murder carries a potential sentence of life imprisonment.
Two fires that broke out in different parts of the nursing home tore through the single-story complex before dawn on Friday. Firefighters were forced to crawl through blinding smoke to rescue victims.
A total of 88 patients were evacuated as firefighters searched rooms on their hands and knees for patients, many of them bedridden and suffering from dementia.
Many of the patients were later left in the open on beds and in wheelchairs until they could be transported to alternative accommodations.
"This is a firefighter's worst nightmare," Fire Commissioner Greg Mullins said. "Turning up to a nursing home with elderly people who can't get themselves out of harm's way."
Flames tore through the ceiling, and part of the roof of a wing collapsed. Police confirmed soon after the fire that three patients were dead, including two whose bodies remained in the charred ruins of a room where one of the fires started.
Later, police reported a fourth death among 15 patients who had been admitted to intensive care units. Five suffered severe burns.
An additional 16 patients were being treated Saturday in general hospital wards.
Federal Minister for Mental Health and Aging Mark Butler said the nursing home's fire safety systems were found to meet standards during an audit in July. Fire Assistant Commissioner Jim Smith said the facility did not have sprinklers but was not required by law to have such a fire safety system.
"The reason there's not more fatalities is the tremendous work of the emergency workers getting there very quickly ... and rescuing those patients very quickly," Smith said.
Firefighters described the blaze as Sydney's worst since 16 patients died in a nursing home fire in suburban Sylvania Heights in 1981.