Christie had been viewed by many as the hero of Superstorm Sandy, which left behind $65 billion in property damage and was blamed for at least 181 deaths in the U.S., including 68 in New York and 71 in New Jersey.
Rep. Frank Pallone, D-N.J., said he was notified last week that a preliminary review by the inspector general of the Housing and Urban Development Department has become a "full-blown investigation."
At issue is an advertising campaign that starred Christie and his family as the governor was running for a second term.
"While promoting tourism at the Jersey Shore in the wake of Hurricane Sandy is certainly a worthy endeavor, recent reports have led me to believe that the state has irresponsibly misappropriated funding allocated by Congress from the Sandy aid package and taken advantage of this waiver for political purposes," Pallone wrote in requesting the probe last August.
Last week, Christie was embarrassed by the release of emails that revealed his staff members plotted to cause an epic four-day traffic jam at the George Washington Bridge. Christie has apologized and denied involvement, but New Jersey lawmakers are forming a special committee to investigate the so-called "Bridge-Gate" scandal.
Christie is expected to deliver his annual State of the State address on Tuesday.
ABC News and The Associated Press contributed to this report.