Colom, 66, was taken into custody at his home in an upmarket district of the capital, the head of the special anti-graft prosecution unit, Juan Francisco Sandoval, told AFP yesterday.
Also arrested was Juan Alberto Fuentes Knight, a former finance minister and current chairman of Oxfam International, the British-based charity rocked by accusations of sexual misconduct and exploitation by some staff members in Haiti, Chad and South Sudan.
There was no suggestion of any link between the Guatemala graft accusations and the scandal engulfing Oxfam.
The ex-president told reporters as he was brought to the main court building in Guatemala City that he was confident of being exonerated.
"I am certain this will turn out without foundation ... For us, everything is legal," Colom said.
"I am confident that everything we did was correct," he said, speaking calmly and wearing a dark blue suit.
The judge hearing the case said a decision would be announced February 23 as to whether the matter would go to trial.
Colom was in power for four years from 2008. He was succeeded in 2012 by Oscar Perez, who is in jail pending trial over a separate corruption scandal.
Last month, the country's chief prosecutor, Thelma Aldana, said she did not see Morales "as an ally in the fight against corruption."
Morales triggered a public and political backlash last year when he tried to boot out the Colombian head of a UN-backed anti-corruption body that has been instrumental in bringing scrutiny to bear on graft cases in the country.
Colom and the 10 other suspects are accused of fraud and embezzlement in the 2009 purchase of hundreds of buses to ply routes in the capital, Sandoval said.
The original plan called for purchasing 3,500 buses, but in the end only 400 were delivered, and of those only 50 are running, according to Citizens Action, a Guatemalan group linked to the watchdog Transparency International.
Also in 2009, Colom's party, the centre-left National Unity of Hope party, tried to pass a law exempting the transaction from taxes.
Colom and the nine ministers and one deputy minister arrested signed the deal setting up the transport system, baptised TransUrbano.
The former ministers include those who held portfolios for finance, governance, education, defence, labour, health and environment.
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