Last week, the supermarket announced that its profits had been overstated by £263m, up from an initial estimate, made last month, of £250m.
As a result of the SFO's intervention, the Financial Conduct Authority will discontinue its own investigation into Tesco.
The SFO has notified Tesco that it will launch a formal criminal investigation into accounting practices at the company.
The FCA said:
"In the light of the Serious Fraud Office decision to launch an investigation into this matter, and following consultation with the SFO, the Financial Conduct Authority has decided to discontinue its own investigation with immediate effect."
In a stock market statement, Tesco said:
"Tesco confirms that it has been notified by the Serious Fraud Office that it has commenced an investigation into accounting practices at the company.
"Tesco has been cooperating fully with the SFO and will continue to do so. Tesco has been notified by the Financial Conduct Authority that, in light of the SFO investigation, its investigation will be discontinued."
