The breakthrough in the cold case was made late on Wednesday following the discovery of human remains, believed to be those of Susan Goodwin, 39, buried in the backyard of a house in Port Lincoln, South Australia.
Major Crime detectives arrested and charged a 64-year-old Port Lincoln man with the murder of Ms Goodwin, who was reported missing in July 2002.
He will appear in Port Lincoln Magistrates Court on Thursday.
Earlier, police said they had paused their search after the discovery of bones at a Port Lincoln property during preliminary excavations.
An anthropologist from Forensic Science SA and additional resources from the forensic response section and Major Crime branch have travelled to the town to confirm if the bones are human remains and continue excavations.
Police had been using specialised radar equipment to scan a property in Pamir Court, which adjoins Moonta Crescent, where Ms Goodwin had lived.
On Tuesday, Detective Inspector Andrew Macrae said it was "a tragedy that Susan's family have spent the last 23 years without answers''.
Ms Goodwin was last seen about lunchtime on July 19, 2002, after shopping at Coles and Woolworths in Port Lincoln.
Police had previously said she was murdered "by someone who was very close to her" and they believe the killer still lives in the town.
In 2017, police said a public appeal for information had led to seven persons of interest being cleared by the investigation.
A reward of up to $200,000 is offered for information leading to the conviction of Ms Goodwin's killer and/or information that leads to the recovery of her remains.