Xi, who is also the head of the Communist Party of China (CPC) and the military, set up the special unit to probe former head of internal security Zhou Yongkang, Hong Kong-based daily 'The South China Morning Post' reported.
Zhou was the ninth ranking member of Standing Committee of CPC when it was headed by former President Hu Jintao.
Zhou retired along with Hu and all other top leaders of the previous regime in the once-in-a-decade leadership change in November last year.
Beijing police chief Fu Zhenghua will head the unit and will report directly to Xi, the report said.
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Zhou was connected closely to state-owned China National Petroleum Corp. Zhou will be the highest party leader in recent years to face such a probe for omissions and commissions during his longstanding stint at the helm. Several officials of the company have been removed ahead of the probe, the report said.
The move reflects Xi's personal interest combating graft through the party's Central Commission for Discipline Inspection.
A number of officials have faced probes in different parts of the country, some even receiving suspended death sentences.
The government has projected Bo's trial as a symbol of cleansing the party and country of corruption.
Bo, 64, who held many top posts including the country's Commerce Minister and regarded as a rebel heading the pro-Maoist faction in ruling CPC, was sentenced to life imprisonment on charges of bribery, embezzlement and abuse of power by a Jinan court last month.