The investigation relates to a major conflict of interest at the heart of a multibillion-dollar submarine purchase by the Israeli government from German submarine manufacturer ThyssenKrupp.
In November 2016, the attorney general ordered police to look into allegations of improper conduct related to the deal — upon completion of their investigation, in which evidence gathered suggests figures involved in the deal had committed "crimes pertaining to public corruption," the attorney general asked the ministry to launch a full-fledged investigation.
No names have been released, but it's likely the investigation involves Netanyahu's personal lawyer, David Shimron — he simultaneously represented ThyssenKrupp and Netanyahu at the time of the sale.
The ministry stressed Netanyahu himself is not a suspect in this particular case, but the Prime Minister is currently being investigated in a number of corruption cases. Key accusations include Netanyahu accepting €1 million (US$1.1m) from French fraudster Arnaud Mimran during his 2009 election campaign, questionable foreign trips taken between 2003 and 2005, when he was Finance Minister, receiving gifts from Israeli businessman and Hollywood producer Arnon Milchan, and a secret deal with Amnon Moses, publisher of Israel's top-selling newspaper Yediot Aharonot.
The discussed deal, which was never completed, would've seen Netanyahu receive positive coverage in return for helping curb the activities of Yedioth's competitor, the pro-Netanyahu freesheet Israel Hayom.
Netanyahu rejected any charges of misconduct, and said he was the target of a campaign by political opponents.
Netanyahu on his upcoming Police investigation: "Hold you horses. Don't celebrate yet. There will be nothing, because there is nothing"— Barak Ravid (@BarakRavid) January 2, 2017
Netanyahu has long been the subject of scrutiny over his financial dealings and has been accused of using state funds to bankroll his family's lavish lifestyle. Netanyahu's wife Sara was questioned for nine hours in December 2016 on the subject of misused state funds, with questioning motivated by statements made to police by Meni Naftali, former caretaker at Beit Aghion, the official residence for the Israeli head of state in Jerusalem.
Authorities also revealed at the time that Gil Sheffer, former Netanyahu chief of staff, had lodged a sexual assault complaint against him.
Netanyahu, 67, has been in power intermittently since 1996. Currently in his fourth term, and will become Israel's longest-serving leader if he stays in office until the end of 2018.
He is not the first leading Israeli politician to be questioned on "graft" charges. Ariel Sharon was questioned while in office in 2004 over corruption allegations.
In 2006, his son Omri was convicted of corruption and served nine months in prison. In May 2015, Ehud Olmert, in office 2006 to 2009, was sentenced to 18 months in prison after being convicted of breach of trust and bribery.