The 58-year-old man was arrested on suspicion of dangerous driving following the collision on the A15 near the Spridlington turn-off, south of Caenby Corner, on Friday night.
The man was driving a blue Volvo V70 estate car which collided head-on with a red GTI VW Golf which was travelling north towards Scunthorpe at about 8.20pm.
Richard Taylor, 77, from Ashby near Scunthorpe was driving the Golf and died at the scene.
The Worksop man was treated in Lincoln County Hospital overnight for a head injury. He was arrested and has since been released on police bail.
Lincolnshire Police are appealing for witnesses to the collision or anyone who saw either car in the minutes leading up to the incident to contact them via the collision witness hotline 01522 558855.