The 35 year old was reportedly detained after an incident at a hotel in South London on Saturday, where County were staying ahead of an FA Cup match at non-league Sutton United.
"Notts County can confirm that the club are aware of an alleged incident involving one of our players at the team's hotel on Saturday, December 3," the club said in a statement, without naming Hughes.
"As this is a police matter, the club will be making no further comment on this incident."
Police confirmed the arrest, adding the player’s age but not giving his name.
"Police were called at approximately 11.10pm on Saturday December 3 to a hotel in Purley Way, Croydon, following an allegation of sexual assault," the Metropolitan Police said in a statement.
"A man, aged 35, was arrested on suspicion of sexual assault and taken into custody at a south London police station.
"He was subsequently bailed to a date in late January pending further investigation by officers from Croydon borough.