The preliminary charges were issued against Sarkozy, 58, after he went through hours of questioning in a Bordeaux courthouse, according to the prosecutor's office. The ex-president is accused of "abuse of someone in an impaired state" in the case involving L'Oreal cosmetics fortune heiress Liliane Bettencourt, who is now 90.
Under French law, preliminary charges mean the investigating magistrate has reason to believe wrongdoing was committed, but allows more time to investigate. The charges may later be dropped or could lead to a trial.
Sarkozy potentially could join his predecessor and former mentor, former President Jacques Chirac, who was convicted after office. In a political financing scandal of his own, Chirac in late 2011 became the only former French leader since World War II-era Nazi collaborator Marshal Philippe Petain to be charged or convicted of a crime.
The charges were unlikely to have any immediate political impact. The conservative Sarkozy said his political career was over and assumed a low profile after losing his re-election bid to Socialist Francois Hollande in May. While some polls suggest Sarkozy is the mainstream right's favored candidate in the next presidential race, it's not until 2017.
Still, Sarkozy's travails were likely to take the media spotlight off political scandal that hit Hollande's government this week, with the resignation of Budget Minister Jerome Cahuzac over allegations that he squirreled away cash abroad to avoid paying French taxes.
The investigation in Bordeaux that has caught up Sarkozy centers on the finances of Bettencourt, who was once the focus of a long-running family feud over her fortune. Bettencourt, who was reported to suffer from Alzheimer's disease, has since been placed under legal protection.
Sarkozy lost his legal immunity from prosecution when he failed to win re-election. In November, he was given the status of a so-called "assisting witness," with the possibility of facing charges later on allegations of abusing someone in an impaired state, swindling and abuse of confidence.
After Thursday's questioning, a three-judge panel opted only to retain the first of those counts related to activity in February 2007 and throughout that year, according to the prosecutor's office. It emphasized that the former president is still presumed innocent of any wrongdoing.
Investigating judge Jean-Michel Gentil was looking into conflicting accounts about how many times Sarkozy - a darling of the mainstream political right - visited the home of Bettencourt in the run-up to his winning 2007 campaign for president, according to one lawyer.
Earlier in the probe, Bettencourt's ex-accountant told police she gave 150,000 euros ($192,000) to the manager of Bettencourt's fortune that was to be passed on to Sarkozy's campaign treasurer.
"If Mr. Gentil placed Mr. Sarkozy under investigation this evening it's because he had a reason to do so," said Antoine Gillot, a lawyer for Bettencourt's former butler, who was also questioned Thursday along with Sarkozy, on French TV i-Tele. "It was a semi surprise ... it means the judge has a certain number of facts."
Sarkozy's lawyer and spokeswoman didn't return calls, e-mails or text messages from The Associated Press seeking comment about the decision Thursday. But Thierry Mariani, a lawmaker and ally in Sarkozy's conservative party, suggested the charges were politically motivated and part of an effort to discredit Sarkozy just as polls suggest he is still widely liked and show big disappointment in Hollande - whose popularity has tanked just 10 months into his five-year term.
Since his defeat, Sarkozy has largely drifted out of the public eye, at times turning up in places like the lucrative international speaker circuit. Compared to the height of his political career, Sarkozy has seemed to shun the cameras. He reportedly entered the courthouse Thursday unseen by journalists, and didn't comment on his way out.
Thursday's decision contrasted with the air of triumphalism expressed by Sarkozy's allies in November after he was named as an assisted witness - somewhere between a simple witness and a formal suspect. His defense lawyer, Thierry Herzog, at the time called that decision a "victory" and said the case against Sarkozy "no longer exists."