The former Boro winger was held along with a 32-year-old woman - believed to be an ex-partner - after officers were called to a venue in Yarm High Street, near Middlesbrough, shortly before 1am on Sunday.
Cleveland Police said the two arrested were later bailed after being held for questioning and inquiries were continuing.
A spokeswoman said: "The 27-year-old man and the 32-year-old woman arrested on suspicion of assault have now been released on police bail pending further inquiries.
"Inquiries into the incident are ongoing and there will be no further details released by police at this time."
The incident was said to have happened in the Cross Keys pub, in Yarm High Street, which is popular with footballers.
Liverpool FC declined to comment.