Knight was led away in handcuffs after armed officers swooped on a house in Erdington, Birmingham, early on Wednesday, The Sun reported.
West Midlands Police said officers executed a warrant under the Misuse of Drugs and Firearms Act at an address in Poppy Lane, Erdington.
A force spokesman, who did not name 27-year-old Knight, said: "Two men, aged 26 and 27, were arrested on suspicion of Class A drugs offences.
"The 27-year-old man has since been released on police bail."
Police also confirmed that the 26-year-old man was charged with possessing class A drugs with intent to supply and was due to appear at Sutton Coldfield Magistrates' Court on Thursday.
A quantity of controlled drugs was seized during the raid, which is said to have occurred at around 5.30am.
Villa paraded Knight before the media at 2.30pm at their training ground, but he made no mention of his arrest during the press conference.
A spokeswoman for the Premier League club acknowledged that Knight had been arrested, but stressed that he had not been charged with any offence.