The 39-year-old, whose real name is Stephanie Clifford, has been embroiled in a legal dispute with Mr Trump and his attorney Michael Cohen for the last few months.
Ms Daniels claimed she had sex with Mr Trump in 2006 and alleges she was later paid $130,000 by Mr Cohen to keep quiet about it, prior to the 2016 US presidential election.
She is suing for defamation and to be released from a non-disclosure agreement she signed in October 2016 in exchange for the $130,000 payment.
Why was Stormy Daniels arrested in Ohio?
Ms Daniels was arrested at a strip club in Columbus, Ohio, on Wednesday for allegedly having physical contact with three undercover officers posing as customers.
Her lawyer Michael Avenatti described his client’s arrest as a sting operation and one that was “politically motivated”.
He said on Twitter: “This was a setup & politically motivated. It reeks of desperation. We will fight all bogus charges.”
He added the routine the stripper performed on Wednesday during her arrest was the same one “she has performed across the nation at nearly a hundred strip clubs”.
What does Ohio law state?
Under Ohio law, employees and patrons of strip clubs are not allowed to touch one another.
Stormy Daniels arrest: Why was Stormy Daniels arrested in Ohio?
Mr Avenatti said any touching was “non-sexual” and his client would enter a plea of not guilty to the charges.
Ms Daniels was released on bail on Thursday morning and is expected to appear in court on Friday.
She issued an official statement through Mr Avenatti on Twitter, saying: “As a result of what happened last night, I will unfortunately be unable to go forward with tonight’s scheduled performance. I deeply apologise to my fans in Columbus.”
Columbus Police said Ms Daniels was arrested along with two other women.
Stormy Daniels outside a US federal court with her lawyer Michael Avenatti in Manhattan, New York
Donald Trump, pictured with wife Melania arriving in the UK, denies Ms Daniels’ allegations
The force tweeted: “Since last fall, Columbus Police were made aware of illegal activity through various adult entertainment clubs throughout the city.
“Columbus Police have made numerous arrests utilizing this law. The Division engages in these operations routinely with no effect on other calls for service.”
President Trump, who is currently on a four-day visit of the UK with his wife Melania, has consistently denied accusations of sexual conduct with the adult film star.
He has not made any comment today in regards to the Ms Daniels’ arrest.
In May, he said the adult film star was paid to stop “false and extortionist accusations”.