Chen says the allegations against him are part of a campaign of persecution by Taiwan's current president, Ma Ying-jeou, who he says is trying to placate the Chinese government in Beijing.
The former president is a strong advocate of Taiwanese independence and frequently crossed swords with Beijing over the issue during his time in office.
He opposes Ma's policy of forging closer ties with the mainland, from which Taiwan split amid civil war in 1949.
Ma swept to victory in March elections, partly on a promise to expand economic ties with China and begin a political dialogue aimed at ending nearly 60 years of tensions with the mainland.
However, analysts say long-standing corruption allegations against Chen, his family, and his associates contributed to Ma's victory.
Chen has been held at Tucheng jail in suburban Taipei since early Wednesday morning.
His detention followed a lengthy overnight court hearing which concluded there was enough evidence to hold him for up to four months to prevent him from colluding with alleged co-conspirators.
Nine other people, including a former vice premier and a former intelligence chief, are being held in connection with the same corruption allegations mounted against Chen.