The Canberra man faces one count each of making a false statement about a threat to damage an aircraft and failing to comply with the cabin crew's safety instructions.
Australian Federal Police said the man became disruptive on the flight from Sydney to Kuala Lumpur and claimed to have explosives on board.
The offences carry a maximum penalty of 10 years in jail.
He is expected to appear in Downing Centre Local Court on Tuesday.
The mid-air drama took place after flight MH122 left Sydney Airport bound for the Malaysian capital on Monday afternoon.
The pilot decided to turn the plane around while it was over north-west NSW after the passenger allegedly began yelling, making references to Islam and gesturing at a backpack worn on his chest.
The plane returned to Sydney about 3.45pm before a tense, three-hour standoff on the tarmac ended when the man was arrested.
Passenger Edo Kahn said the situation on board escalated after the plane took off and the man began praying "really loudly".
"People thought maybe he was just scared of flying initially, but then it just sort of got worse as things progressed and the whole situation with him not letting go of his bag," he told Sydney radio 2GB.
Velutha Parambath, who was travelling with his young family, told Nine's Today program the man began saying "Allahu akbar" and pointing to a bag next to him as the plane started taking off.
Others on board the flight said the man yelled at flight attendants, made threats and knelt in the aisle of the aircraft.
The 194 passengers and five crew were evacuated from the A330 aircraft and taken to the terminal.
But some criticised the AFP for the time it took officers to board the plane and arrest the man after the flight returned to Sydney.
"They could have disembarked us, they could have done something," Mr Parambath said.
"We were just isolated at the end of the runway and that was the scariest of all.
"If the plane actually had a bomb, I don't think we would be here today."
The AFP said officers acted once it was safe to do so.
NSW Premier Chris Minns said police faced a "really difficult set of circumstances", but it was appropriate the response to the incident was subject to a review.
"A lot of these things are easy to look back with in hindsight," he said.
NSW Police Commissioner Karen Webb praised the work of the flight crew, adding the three-hour response time for officers to enter the plane and arrest the man was "pretty good".
"We can never presume anything and you don't know whether this person was acting alone or he actually had other support on the plane or outside the plane," she said.
"The protocol in Australia is to negotiate, we don't storm planes, this is not TV, it's not the movies - we want to protect the lives of all passengers."
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