Police identified the adult victim as Remona Hudson of Cuthbert, Georgia, but have not released the names of the two dead children, who all lived together in the small rural town about 25 miles east of Eufaula.
It was unclear how police first developed McGhee as a suspect and what his connection was to the victims.
Previously, authorities described McGhee as a person of interest and said he sustained injuries that required him to be airlifted to Southeast Health in Dothan.
It was not clear if McGhee had been found in the car with the deceased, whose bodies were found Monday morning inside a blue Toyota sedan near the shore of the lake along the Alabama-Georgia line.
Police have not said how the car wound up there, nor how long it was in the water.
Investigators said Hudson and the children were likely dead before the car went in the water near Old Creek Town Park, where a woman jogging spotted the vehicle Monday and called police.
Officers guarded McGhee at the hospital Tuesday while awaiting the arrival of state investigators, who arrested him the next day, reports said.
Eufaula, where the bodies were found, is about a 45-minute drive south of Fort Benning in Columbus.
Photos showed the vehicle had tinted windows that were visible because the water level didn’t quite reach the door handles.
The Alabama State Bureau of Investigation is handling the case.