The former president, Juan Orlando Hernandez, had been protected from prosecution by a Department of Justice policy to not indict sitting heads of state. After he stepped down last month that is no longer the case.
Scores of Honduran police officers have surrounded the house of former president Juan Orlando Hernandez after the United States asked the government to arrest and extradite Washington's key erstwhile ally in the region.
Hernandez's lawyer, Hermes Ramirez, told local Canal 5 television on Monday that the former president was holed up inside his home.
The arrest warrant for Hernandez is illegal because he has immunity as a member of the regional Central American parliament, he added.
"They are trying to trample on the rights of President Hernandez," Ramirez said.
Speculation has been swirling for months that the United States was planning to extradite Hernandez when he left office amid accusations that he colluded with drug traffickers.
Leftist leader Xiomara Castro replaced him as president last month.
Washington's request for extradition represents a major about-face by the US government, which saw Hernandez as a vital ally in the volatile Central America region during his eight years in power.
The United States had already placed Hernandez on a blacklist, and US Secretary of State Antony Blinken this month said there were credible reports Hernandez "has engaged in significant corruption by committing or facilitating acts of corruption and narco-trafficking".
Hernandez could not be immediately reached for comment but he has always denied any links to drug traffickers.
A Reuters witness outside Hernandez's house said about 100 police officers were waiting outside.
Hernandez formally joined the Guatemala-based regional body, called Parlacen, just a few hours after Castro's inauguration as president.
Parlacen affords members immunity from prosecution in Central America, though that immunity can be removed or suspended if a member's home country requests it.
Luis Javier Santos, Honduras' best known anti-corruption prosecutor, said on Twitter that "there is no impediment to his extradition".
The Honduran Foreign Ministry earlier in the day said the US Embassy had requested the arrest of a Honduran politician who is the subject of an extradition request to the United States, without naming him.
Melvin Duarte, a spokesperson for the Honduran judiciary, said the Supreme Court is due to meet on Tuesday to name a judge to oversee Hernandez' extradition case.