The move represents a major escalation in US President Donald Trump's battle with the Fed, an independent agency he has repeatedly attacked for not cutting its key interest rate as quickly as Trump prefers.
The subpoena relates to his testimony before the Senate Banking Committee in June, Powell said, regarding the Fed's $US2.5 billion ($A3.7 billion) renovation of two office buildings, a project that Trump criticised as excessive.
Powell cast off what has up to this point been a restrained approach to Trump's criticisms and personal insults, which he has mostly ignored.
Instead on Sunday, US time, the Fed chair issued a video statement in which he bluntly characterised the threat of criminal charges as simple "pretexts" to undermine the Fed's independence when it comes to setting interest rates.
"This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation," Powell said.
It's a sharp departure from the Fed's understated response to Trump so far.
The central bank has attempted to placate the administration by dialling back some policies, such as efforts to consider the impact of climate change on the banking system, that the administration clearly opposed.
In his testimony in June, Powell disputed some of the criticisms that had been levied against the Fed's renovation of two historic office buildings, which have ballooned in cost.
The White House did not immediately respond to a message seeking comment.
The Justice Department in a statement said it can't comment on any particular case, but added Attorney General Pam Bondi "has instructed her US Attorneys to prioritise investigating any abuse of tax payer dollars".
With the subpoenas, Powell becomes the latest perceived adversary of the president to face a criminal investigation by the Trump administration's Justice Department.
Trump himself has urged prosecutions of his political opponents, obliterating institutional guardrails for a Justice Department that for generations has taken care to make investigative and prosecutorial decisions independent of the White House.
The potential indictment has already drawn concern from one Republican senator, who said he'll oppose any future nominee to the central bank, including any replacement for Powell, until "this legal matter is fully resolved".
"If there were any remaining doubt whether advisers within the Trump Administration are actively pushing to end the independence of the Federal Reserve, there should now be none," said North Carolina Senator Thom Tillis, who sits on the Banking Committee, which oversees Fed nominations.
"It is now the independence and credibility of the Department of Justice that are in question."
