Moon, 72, was indicted for bribery, while in the same case former MP Lee Sang-jik was indicted for bribery and breach of trust, Jeonju District Prosecutors' Office said on Thursday.
Prosecutors had been investigating whether Lee's appointment as the head of the SMEs and Start-ups Agency was in exchange for Moon's former son-in-law getting a job and receiving a salary plus living expenses at the Thai-based corporation that Lee controlled in 2018-2020, the statement said.
The prosecution alleges that the money Moon's son-in-law received as an executive director totalling 5.95 million baht ($A278,000), was irregular and constituted a bribe to the then-president.
Prosecutors referenced previous bribery cases involving former presidents Park Geun-hye and Lee Myung-bak, both of whom were convicted and jailed, as precedents for Moon's indictment.
Moon, Lee and their legal representatives could not immediately be reached for comment.
Youn Kun-young, an MP and a close aide to Moon, accused the prosecution in a Facebook post of setting Moon up through "ridiculous and groundless charges" without properly investigating him.
The liberal-leaning Moon, a lawyer and a civil rights activist, was president between 2017 and 2022.
In the past two decades, a string of South Korean leaders have faced trials or scandals for the most part towards the end of their terms or after leaving office.
Moon's successor, Yoon Suk-yeol, was removed from office in April after being impeached over his short-lived imposition of martial law.Â
The conservative former leader, who had denied wrongdoing, is now on trial on criminal charges of insurrection.
South Korea is holding a snap election to pick a new leader on June 3, with the liberal-leaning Lee Jae-myung from the same Democratic Party as Moon the frontrunner in opinion polls to win the race.
Lee's campaign called Moon's indictment political retribution by the prosecution and a crackdown on the previous administration.
