Cagliari president Massimo Cellino was one of three people arrested Thursday as police looked into possible wrongdoings in the construction of the club's Is Arenas stadium, ANSA news agency reported.
Cellino was arrested with Mauro Contini, the mayor for the district of Quartu where the stadium is located, and the councillor for public works, Stefano Lilliu.
All three face charges on suspicion of embezzlement and forgery, according to the report.
The Is Arenas has been in the Italian football headlines several times this season.
Last week authorities wanted to stage the Cagliari v AC Milan game in Turin over security fears because the Is Arenas stadium is still not fully completed.
However an 11th-hour compromise was reached and the game went ahead at the Sardinian club's new ground.
Cagliari FC, who are currently fifth from bottom in Serie A, have yet to make any statement on the news.