The agency officials, according to sources, questioned Reddy for over three hours about the investments he had made in various firms and his share holding patterns in these companies.
The questioning will continue tomorrow also.
The agency had earlier approached a special court in Hyderabad requesting permission to question Reddy who is lodged in Bangalore central prison in connection with a mining case allegedly involving Associated Mining Corporation (AMC) and Deccan Mining Syndicate (DMS) owned by him and his wife Aruna Lakshmi.
The ED, the sources said, will confront Reddy with questions regarding his wealth from the mining business, which is said to be over Rs 400 crore, on the basis of the CBI charge sheet.
After the questioning, the ED may choose to attach properties of Reddy and his associates under the stringent provisions of the Prevention of Money laundering Act (PMLA).
Gali Janardhan Reddy and his brother-in-law B V Srinivas Reddy were arrested in September last year from Bellary and were brought to Hyderabad.
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The CBI had also filed a charge sheet against Janardhan Reddy and others in December in the Obalapuram Mining Case (OMC) case and took him to Bangalore in connection with the AMC and DMS mining case in Karnataka.
OMC is accused of changing mining lease boundary markings between Andhra Pradesh and Karnataka and indulging in illegal mining in the Bellary reserve forest areas, spread between Bellary district of Karnataka and Anantapur district of Andhra Pradesh.