"Mubarak and his two sons Alaa and Gamal have been detained for 15 days for questioning on corruption and abuse of authority charges," official news agency MENA reported quoting a statement from the Justice Ministry.
The dramatic announcement came just hours after the former president, 82, was abruptly hospitalised in the beach resort of Sharm al-Shaikh.
Officials said, Mubarak took ill as prosecutors began questioning him about accusations.
The prosecutors` statement posted on the social networking site Facebook said ongoing investigations were going into allegations of "corruption, squandering of public funds and abuse of authority for personal gain".
The specific reasons for Mubarak`s admission into the Sharm al-Shaikh international hospital was not clear, although media reports said he had heart problems. But Justice Minister Mohammad al-Guindi said questioning of the toppled President continued in hospital, in an indication that his health problems were not severe.
Mubarak and his family retreated to the Red Sea resort after he stepped down in the face of 18 days of protests and turmoil, that led to a clamour for reform in the entire Arab world from Tunisia to Egypt. The protests have since spread to Yemen, Bahrain, Jordan, Syria and elsewhere.
The arrest of Mubarak and his sons came under snowballing protests in Egypt to prosecute him. Tens of thousand of people have been rallying in Cairo`s iconic Tahrir Square calling for his trial.
The people`s fury remained unabated as the crowds in Sharm al-Shaikh pelted a police van carrying Mubarak`s two sons to prosecutor`s office with water bottles and stones.
Mubarak arrest came despite his coming out of seclusion to appear on Al-Arabiya television to defend his reputation and deny that he and his family had abused power or had assets abroad.