The terse statement followed days of Israeli media speculation about possible official suspicions of misconduct by Netanyahu or by people close to him.
Through his lawyer, Netanyahu – now serving his fourth term as prime minister – has denied any wrongdoing.
Attorney-General Avichai Mandelblit’s decision followed “the receipt of information about matters that relate, inter alia, to the prime minister” and which he has discussed with senior Israeli police and prosecutors, the statement said.
“It should be emphasised that this is an inquiry and that no criminal investigation has been launched regarding the prime minister,” it said.
An inquiry can potentially be a preliminary stage to a criminal investigation.
The statement described the media reports on the case as “inaccurate, to say the least”, but said Mandelblit could not comment further at this stage.
First elected to Israel’s top office two decades ago, Netanyahu has weathered several scandals, including a police investigation and state audits into his family’s spending.