The intruder was not carrying any weapons and the incident is not being treated as terror-related, according to Scotland Yard.
Sources say it took police on site around four minutes to apprehend him while they tried to assess whether he was as armed - causing panic within the Palace about the massive security breach.
The man is now being held at a central London police station.
A Metropolitan Police spokeswoman said: "The 22-year-old man was arrested at approximately 2am on Wednesday July 10 by officers from the Met's Royalty and Specialist Protection Command after he climbed over the front gates at Buckingham Palace".
Buckingham Palace declined to comment, but royal insiders said the Queen is aware of the incident.
In September 2013 a security review was launched after an intruder was able to scale a fence and get inside the palace, before being arrested by police.
Police were anxious that this invasion was a copycat operation of a previous Buckingham Palace break in 37 years ago-this incident last night had nearly occurred on the exact date as the other one.
A number of people have been detained in recent years after climbing into the grounds of the palace.
"How is it possible all these years later that someone can climb the fence and get right inside the grounds without being stopped immediately? It's very odd given the infamous Fagan business almost 37 years ago", the source says. What about heat censors and CCTV?
The latest security breach, one of several, comes almost 37 years to the day when unemployed labourer Fagan broke into Her Majesty's bedroom on July 9, 1982.
Another source added: "Everyone knows the Queen was there because the Royal Standard was flying".
The 31-year-old schizophrenic then began talking to her about his family problems.