North Yorkshire Police said a man in his 20s has been arrested on suspicion of causing death by dangerous driving and is currently in police custody.
Bailey was killed on the B6265 in Lupton Bank, between Pateley Bridge and Glasshouses, in the early hours of Sunday (July 20) while walking home from work at a local pub.
Police have urged people not to speculate on social media about the crash “to avoid prejudicing any potential future court proceedings”.
Officers are continuing to appeal for information about the incident, urging anyone who has not yet come forward to contact North Yorkshire Police or Crimestoppers anonymously.
Bailey had been due to go travelling to Thailand this week and the police officer in charge of the investigation said the teenager had “a lifetime of adventures ahead of him”.
Speaking close to the scene of the collision near the village of Glasshouses on Wednesday, his mother, Dayle Knights, said through tears: “No words can express how absolutely devastated we are.
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"IT'S fantastic that we could make this happen."
