The 57-year-old Chen, who has been in detention since last month pending the current investigation, became the first president in the island nation's history to be so indicted, the Central News Agency reported.
The charges stem from Chen's handling of his discretionary "state affairs fund" when he held office from 2000 until May 2008, the report said. They also relate to transfer of funds to foreign accounts held by his family, CNA reported.
The prosecutors sought the "harshest penalty" against the family.
The charges say Chen and family made millions from campaign funds, The New York Times reported.
"Ex-President Chen Shui-bian's crimes are major," a Supreme Court special prosecutor's office spokesman was quoted as saying.
Chen has denied the charges against him, claiming he is being targeted because of his stand against China.
While in office, Chen strongly advocated independence for Taiwan, which mainland China claims as its territory. President Ma Ying-jeou, who succeeded Chen, has sought to pursue a friendlier policy toward China.
Notable deaths of 2014 [PHOTOS]