The attacker identified as Pawan Kunwar, a 25-year-old resident of Baglung district, slapped Prachanda after shaking hands with him and other Maoist leaders at the reception held in Kathmandu.
Eye witnesses said Prachanda's spectacles fell to the ground and there was confusion at the venue for close to 10 minutes after the incident.
The youth was who was apprehended and beaten up by Unified Communist Party of Nepal (Maoist) cadres was handed over to security personnel.
Prachanda's party has dubbed the incident as "pre-meditated" while the home ministry has formed a three-member panel to probe it.