After 17 years at the helm of football's ruling body the 79-year-old is suspected of "criminal mismanagement...And alternatively misappropriation" of FIFA funds, Switzerland's top prosecutor said.
Friday's dramatic development is the latest twist in a traumatic year for the head of world football.
In June, Blatter stunned the watching world with his resignation announcement just four days after being voted to a fifth term.
While Blatter has seen off mutinies by discontented FIFA members, he could not hold off US and Swiss authorities investigating bribes and the awarding of the 2018 and 2022 World Cups.
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It has been a stunning fall from grace for a man who in May was compared to Jesus, Moses, Winston Churchill, Martin Luther King and Abraham Lincoln by Dominican Republic FA president Osiris Guzman at a Central and North American confederation (CONCACAF) meeting.
It was the arrest of CONCACAF president Jeffrey Webb as part of an American investigation into tens of millions of dollars of bribes in Zurich that started the process that ended in his walking away from an organisation he has been involved with for 40 years.
He came through allegations about 'brown envelopes' handed out before his 1998 election and the collapse of the ISL sports marketing empire.
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Blatter said he was unfairly blamed for everything that goes wrong in football.
"In my 40 years at FIFA I have learned to live with hostility and resentment," he said recently.
"However as the German language proverb puts it: sympathy is free, but envy must be earned."
There is a lot to envy.
Blatter is in 70th place on the Forbes list of the world's most powerful people -- the only sports leader in the group jostling behind the likes of Vladimir Putin and Barack Obama.