Switzerland's attorney general's office says it opened criminal proceedings against Blatter for possible criminal mismanagement and misappropriation of FIFA money.
The Swiss federal office says Blatter was interrogated after chairing a meeting of FIFA's executive committee on Friday.
The Swiss federal prosecutor's office also said Blatter's office was searched and data was seized.
FIFA vice president Michel Platini was also questioned as a witness over a "disloyal payment" of 2 million Swiss francs he received from Blatter in February 2011, Swiss authorities say. Under Swiss law, a payment is classified disloyal if it is against the best interest of the employer — in this case FIFA.
Platini, who is the favorite to succeed the outgoing Blatter as FIFA president next February, was a personal adviser to his former mentor when he started out in football politics.
The payment by Blatter from FIFA funds was "allegedly made for work performed between January 1999 and June 2002," the attorney general's office said.
Blatter was interrogated after chairing a meeting of FIFA's executive committee.
The 79-year-old Swiss had been set to hold a news conference for international media after the meeting, but it was first postponed and then suddenly cancelled.
Blatter is the first person to be formally quizzed as a suspect in the Swiss case, which FIFA instigated last November when it complained about possible money laundering in the 2018-2022 World Cup bidding contests won by Russia and Qatar.
The allegations Friday also relate to World Cup broadcasting contracts Blatter agreed to with disgraced former FIFA vice president Jack Warner in 2005.
"There is as suspicion that, in the implementation of this agreement, Joseph Blatter also violated his fiduciary duties and acted against the interest of FIFA," the Swiss federal office said.