Under strict Orthodox tradition, women and men are required to pray in separate sections at the wall, the holiest site where Jews are currently allowed to pray.
Women also may not lead prayers or handle Torah scrolls.
The ultra-Orthodox establishment that oversees the Western Wall considers such acts as provocations.
Lesley Sachs, executive director of the Women of the Wall activist group, was detained as she left with the scroll after attending a prayer service at the wall's women's section, the group said.
Israeli police said she had been detained for questioning before being released on condition she stay away from the wall.
Women of the Wall spokeswoman Shira Pruce said Sachs had been released without charge after two hours, but denied she had agreed to keep away from the Western Wall.
She called the detention "intimidation" and "harassment".
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"Sachs was detained for 'disturbing the public order' despite a relatively quiet and uneventful prayer service with 80 Women of the Wall (members)," a statement from the group said.
"The reason given for the police action was: smuggling a Torah scroll into the women's section."
Women of the Wall holds regular prayer services at the women's section of the wall. Their activities in previous years have led to confrontations with ultra-Orthodox Jews.
Activists have also been detained in the past.
The activists have for years fought for equal prayer rights at the Western Wall, considered among the last remnants of the Second Jewish Temple, destroyed by the Romans around 70 AD.
The government in January approved an agreement to create a third space at the wall open to both women and men, but ultra-Orthodox political parties have come out strongly against it and more discussions are being held.
Pruce said activists met with Prime Minister Benjamin Netanyahu on the issue last week and agreed to give him more time to implement the plan.
The ultra-Orthodox Jewish establishment wields legal power over a range of issues in Israel and has often played a kingmaker role in its politics.