Christine Lagarde has pledged to remain in post at the International Monetary Fund (IMF) as she is placed under formal investigation in her native France.
The case purports to her alleged role in a long-running political feud dating back to the IMF managing director's time as French finance minister.
Sources told the news agency Reuters that Lagarde, who was previously questioned as a witness by magistrates in Paris, would appeal a decision to investigate her for alleged negligence.
Under French law, magistrates can place someone under formal investigation when they believe there are indications of wrongdoing but that does not always lead to a trial.
The status amounts to a preliminary charge.
The case relates to the relationship between the government of former president Nicolas Sarkozy and a French tycoon, who supported him in two elections.
Bernard Tapie was awarded €403m (£320m) in a 2008 arbitration payment, while Mr Sarkozy was in office, to settle a dispute with the now defunct, state-owned bank Credit Lyonnais.
Sarkozy, who was placed under formal investigation two months ago, has denied any suggestion he attempted to interfere with or influence judicial proceedings and claimed allegations against him were politically motivated.
In a statement after a fourth round of questioning before magistrates, Lagarde said she would return to her work in Washington.
She said: "After three years of proceedings, dozens of hours of questioning, the court found from the evidence that I committed no offence, and the only allegation is that I was not sufficiently vigilant".
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