Ayman Nour is the leader of al-Ghad (or the Tomorrow) Party and a member of the Egyptian parliament.
He is alleged to have forged the documents he submitted for the recognition of his party last year.
Mr Nour was stripped of his parliamentary immunity on Saturday and detained by police on leaving the parliament building.
He appeared in court for the second time on Monday and said that his arrest would hinder the democratic process and reform in the country.
Mr Nour, a wealthy lawyer, set up Al-Ghad to campaign for political, economic and constitutional reforms in Egypt.
He was given permission to create the new party after three previous applications had been rejected.
Alleged mistreatment
On Monday, five Egyptian rights groups protested against the lifting of Mr Nour's parliamentary immunity. The groups characterised the move as "a message [from the Egyptian government] to other political parties".
Human rights groups in Egypt are calling for his immediate release.
Mr Nour has alleged that he was mistreated during his detention.
"I was attacked and pushed to the ground. I received blows under the right eye and was hit on the back several times," Nour was quoted as saying in a statement issued by the Egyptian Organisation for Human Rights.
The group says Mr Nour was interrogated for eight hours without a break, in violation of international agreements on human rights and the international agreement against torture signed by Egypt.
In Washington, the US State Department expressed concern about Mr Nour's detention and reports of his mistreatment. He also urged the Egyptian government to take notice of his health.
Mr Nour is accused by Egyptian state security investigators of forging all but 14 of the more than 2,000 signatures he was required to gather in his application to form a political party.
He rejects the charge, insisting the Political Parties Committee had the original signatures.
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