A New Zealander and two Burmese men running a bar in Yangon have been accused of insulting Buddhism over a flyer depicting Buddha with headphones.
The trio appeared in court for using the image to promote a drinks event.
The image triggered an angry response online shortly after it appeared on the bar's Facebook page.
Burmese law makes it illegal to insult or damage any religion. Myanmar, also known as Burma, has also seen growing Buddhist nationalism.
The BBC's Jonah Fisher in Yangon says the flyer from VGastro Bar showed Buddha with his eyes shut, wearing large headphones, and surrounded by lurid colours. The words alongside advertised a drinks afternoon for Sunday with limitless alcohol and shisha pipes.
'Our ignorance is embarrassing'
On Wednesday, police shut down the bar and detained general manager Philip Blackwood, 32, owner Tun Thurein, 40, and manager Htut Ko Ko Lwin, 26, reported AFP news agency.
The arrest was triggered by a complaint by an official from the country's religious department.
The three are expected to be formally charged next week and can face up to two years in jail.
The picture has been removed and replaced with an apology, stating that the management's intention "was never to cause offense to anyone or toward any religious group".
"Our ignorance is embarrassing for us and we will attempt to correct it by learning more about Myanmar's religions, culture and history."
News outlet Stuff quoted a New Zealand foreign affairs ministry spokesman as saying they were aware of the arrest of Mr Blackwood and were providing consular assistance to him and his family.
Buddhist nationalism has been on the rise in recent years, with extremist monks such as Wirathu growing in popularity and increasing clashes with Muslim minorities, particularly in Rakhine state.
International observers, including US President Obama during his November visit to Myanmar, have appealed to the Burmese government to look into discrimination of some groups, including the Muslim Rohingyas.