The 16-year-old boy has been charged with one count of murder, detectives from Victoria's Missing Persons Squad said on Saturday evening.
Police found the remains of Layla Jeffery in Donald, a small town in the state's rural west, late on Thursday afternoon after she went missing last weekend.
A large-scale search was conducted in bushland west of Byrne Street after the teen was reported missing on July 5.
The high school student was last seen on McCracken Street in Donald the previous day but had not been heard from since.
Local police, along with specialist officers from the dog squad, air wing and search and rescue squad were involved in the search.
Detective Inspector Dave Dunstan of the Missing Persons Squad said officers searched a home in Donald shortly after 11am on Friday.
"At this location, we've arrested a 16-year-old youth," he told reporters in Donald on Friday afternoon.Â
"We also have a 53-year-old Donald woman and a 55-year-old woman from Melbourne assisting us with our inquiries."
Det Insp Dunstan said the teenage boy was known to both Layla and the police.
A police spokeswoman said on Saturday the youth was expected to appear late afternoon before children's court for a remand hearing.
Residents in the small town of about 1500 people came together following the devastating news of Layla's body being found.
Donald resident Peta Edmunds said the community was in grief.
"Our hearts are broken, and our entire community is grieving the heartbreaking loss of beautiful Layla," she posted to Facebook.
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