Zuma is accused of taking kickbacks from the $5 billion purchase of fighter jets, patrol boats and other arms, manufactured by five European firms, including British military equipment maker BAE Systems and French company Thales.
National Prosecuting Authority (NPA) spokesman Luvuyo Mfaku confirmed to AFP that Thales would also face prosecution, alongside Zuma. Thales declined to make any immediate comment.
"After consideration of the matter I am of the view there are reasonable prospects of a successful prosecution of Mr Zuma on the charges listed in the indictment," National Director of Public Prosecutions Shaun Abrahams told a media briefing in Pretoria.
Zuma will face one count of racketeering, two counts of corruption, one of money laundering and 12 counts of fraud -- all of which can carry lengthy custodial sentences on conviction.
"I am of the view that a trial court would be the most appropriate forum for these issues to be ventilated and to be decided upon," said Abrahams.
Prosecutors declined to confirm what charges Thales would face. "We don't want to be prosecuting people in the media," said Mfaku. "That will come out in court."
The former president could now appeal the ruling on a number of grounds and argue that the decision is illegitimate.
In December, the High Court in Pretoria ordered then-deputy president Cyril Ramaphosa to replace Abrahams, ruling that Zuma's original decision to appoint him was "null and void" because he was "conflicted" at the time.
"Justice must not only be done, but must also be seen to be done -- I am mindful that everyone is equal before the law," said Abrahams, who noted that "Mr Zuma disputes all allegations against him".
"I don't think Zuma can stay out of court -- there's too many charges hanging over him," independent political analyst and author Nomavenda Mathiane told AFP ahead of the announcement.
Abrahams said that his department's representatives in Zuma's home region of KwaZulu-Natal "will facilitate the necessary processes for Mr Zuma and his co-accused to appear in court".
Last year, a court ruled against a decision by prosecutors in 2009 to drop the corruption charges against Zuma just months before he became president, laying the path to Friday's announcement.
- 'Innocent until proven guilty' -
Zuma's criminal charges relate to an arms procurement deals struck by the government in the late 1990s and from which he is accused of profiting corruptly to the tune of four million rand ($345,000, 280,000 euros).
State prosecutors previously justified dropping the case by saying that tapped phone calls between officials in then-president Thabo Mbeki's administration showed undue interference.
Shaik told the local TimesLive online news wesite that he had been subpoenaed‚ "so I must testify".
"I think the law must take its course," he told News24.
Zuma resigned as president last month after the ruling African National Congress (ANC) party threatened to remove him from office.
The ANC noted Friday's decision and called in a statement for "Comrade Zacob Zuma to be presumed innocent until, and if, proven guilty".
The AfriForum campaign group, which has railed against corruption in South Africa's democratic era, had threatened to privately prosecute Zuma if the NPA did not.
"The NPA's decision to prosecute Zuma (is) not only a victory for AfriForum, but also for the principle of equality before the law," said the group's chief executive, Kallie Kriel.
In addition to the corruption scandals that dogged his time in office, Zuma had been under fire for his handling of the economy, which has been battered by falling economic growth and record unemployment.
The opposition Democratic Alliance (DA) party has campaigned since 2009 to reactivate the charges.
"It doesn't matter who you are, whether you are the president, in whatever office you hold, accountability must be effective and justice will be met," said DA leader Mmusi Maimane.
"He must have his day in court... We will see him in orange overalls."
Zuma's successor Ramaphosa has vowed to tackle corruption, admitting it was a major problem in the previous government.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)