Sarkozy turned himself in, arriving at a police station in the western Paris suburb of Nanterre around 8:00 am in a black saloon car with tinted windows.
He can be held for questioning for a first period of up to 24 hours, with a possible extension of another day. He must then be brought before a judge to be charged or be released.
The detention of Sarkozy, a right-winger who led France from 2007 to 2012, comes a day after investigators took his longtime lawyer Thierry Herzog and two magistrates into custody.
It is the latest in a long line of legal woes for the 59-year-old since he left office following his defeat by President Francois Hollande in the 2012 presidential vote.
Sarkozy has made strong hints of a comeback bid in the 2017 presidential election but his hopes would be dealt a heavy blow if he is charged in this case.
Government spokesman Stephane Le Foll denied any political pressure was put on the courts to go after Sarkozy.
"The justice system is investigating and will follow this through to the end. Nicolas Sarkozy can face justice just like anyone else," he told i-Tele.
Investigators are seeking to establish if the former president, with the help of Herzog, attempted to pervert the course of justice.
They suspect Sarkozy sought to obtain inside information from one of the magistrates about the progress of another probe, in exchange for support in securing a post in Monaco.
Investigators are probing another allegation that Sarkozy was illegally tipped off that his mobile phone had been tapped by judges looking into the alleged financing of his 2007 election campaign by former Libyan dictator Moamer Kadhafi.
Sarkozy is alleged to have been helped to victory in 2007 with up to 50 million euros (USD 70 million at the time) provided by Kadhafi and envelopes stuffed with cash from France's richest woman, L'Oreal heiress Liliane Bettencourt.