A Travis County grand jury handed down the two felony counts late Friday.
The indictments stem from an incident last year in which Perry vetoed the $7.5 million biennial funding for the Travis County Public Integrity Unit. He had threatened to withhold the money unless District Attorney Rosemary Lehmberg resigned.
The Public Integrity Unity is a state-funded part of the Travis County District Attorney's Office. It investigates public corruption and at the time was investigating one of Perry's projects.
Perry had said he didn't believe the state should fund an office directed by someone who didn't have the public's trust, referring to a Lehmberg's drunk driving arrest in 2013.
Lehmberg refused to resign after pleading guilty to the drunk driving charge, served 45 days in prison and completing an alcohol treatment program.
Perry's people said he used his constitutional authority to veto the funds to the Public Integrity Unit and didn't violate abuse of power.
If found guilty of the two charges, Perry faces up to 109 years in prison.
Following the announcement of the indictment, Gilberto Hinojosa, chairman of the Texas Democratic Party, issued a statement calling for the governor to resign.
"Governor Rick Perry has brought dishonor to his office, his family and the state of Texas. Texans deserve to have leaders that stand up for what is right and work to help families across Texas. The indictment today shows a failure of Governor Perry to follow the law. This is systematic of a broader problem: Ken Paxton is facing a possible indictment and Attorney General Abbott has refused to rule on whether Governor Perry can use taxpayer dollars to cover his legal expenses. We call on Governor Perry to immediately step down from office. Texans deserve real leadership and this is unbecoming of our Governor," the statement read.