Reddy, who quit the Telugu Desam Party (TDP) to join the Congress earlier this year, represented Kodangal in the dissolved Assembly.
The Election Commission had also issued a notice to Reddy for his threat.
The police has booked two cases against the Congress leader.
Tension prevailed in Kodangal following Reddy's detention. The police have already imposed prohibitory orders in the town to prevent any untoward incident.
Elections to the 119-member Telangana Assembly are scheduled for December 7.
(With inputs from agencies.)