The step, which often but not always leads to trial, is a major setback to Sarkozy's hopes of a comeback after his 2012 defeat by Socialist rival Francois Hollande. The conservative politician denies all wrongdoing in a string of investigations in which he is either directly or indirectly implicated.
Magistrates are looking to see whether Sarkozy used his influence to secure leaked details of an inquiry into alleged irregularities in his victorious 2007 campaign. He is suspected of influence-peddling, corruption and benefiting from the breach of professional secrets, the prosecutors office said.
Sarkozy, 59, was held in police custody in the Paris suburb of Nanterre for nearly 15 hours before being transferred in the early hours of Wednesday to a court where he met investigating magistrates who will run the inquiry.
Sarkozys attorney and a judge involved in the case were similarly placed under formal investigation on suspicion of influence peddling, their attorneys said.
These events only rely on phone taps ... whose legal basis will be strongly contested, said Paul-Albert Iweins, the attorney for Sarkozy's attorney, Thierry Herzog.
Sarkozys allies cast doubts over one of the investigating magistrates fairness, accusing the judge of political bias.