Serebrennikov, 47, is the artistic director of Moscow's Gogol Centre theatre and has staged productions at the legendary Bolshoi Theatre. His films have been shown at the Cannes and Venice film festivals.
But in recent years Serebrennikov has fallen out of favour with the authorities and has criticised a government clampdown on artistic works, warning last year that "everything is returning to the most pathetic Soviet practices".
The Investigative Committee, which probes serious crimes, said in a statement he has been charged with defrauding the state of at least 68 million rubles (USD 1.15 million, 977,000 euros) in arts funding over three years from 2011 to 2014.
A court will now decide whether or not to put him behind bars. A source told Interfax news agency that this was expected to happen tomorrow.
Serebrennikov's lawyer Dmitry Kharitonov told Kommersant FM radio that his detention was "a complete surprise," adding his client had been shooting a film in Saint Petersburg.
Opposition leader Alexei Navalny said Serebrennikov's detention was a warning to other arts figures that the Kremlin expected absolute loyalty ahead of next year's presidential election, in which Vladimir Putin is expected to run.
Novelist Boris Akunin likened Serebrennikov's detention to the Stalin era, saying the order could have come only personally from the Kremlin chief.
"It wasn't the Investigative Committee that arrested the director Serebrennikov -- it was Putin," he wrote on Facebook.
Serebrennikov could face up to 10 years in prison if convicted.
Investigators had raided the director's flat in Moscow as well as the Gogol Centre theatre in May, prompting protests from leading arts figures, including Vladimir Urin, director of the Bolshoi Theatre.
Putin himself criticised the heavy-handed raids on Serebrennikov's home and workplace, telling the independent Dozhd TV channel they were "just ridiculous".
He said the case was opened because "suspicions arose that there were financial violations".
Police have already arrested three people in connection with the inquiry, two of whom are in custody and the other under house arrest.
The case concerns a theatrical project set up by Serebrennikov called Platform, which staged shows in Moscow.
A former accountant who is in jail awaiting trial has testified against Serebrennikov, investigators said this month.
The centre has been targeted by conservative activists, some of whom even installed a naked cutout of Serebrennikov outside.
At the Bolshoi, Serebrennikov has staged the Rimsky- Korsakov opera "The Golden Cockerel" and a ballet based on Mikhail Lermontov's novel "A Hero of our Time", which won a prestigious Golden Mask award last year.
But he recently ran into trouble with plans for a controversial staging of a new ballet for the Bolshoi based on the life of star dancer Rudolf Nureyev, who defected to the West.
Urin, the Bolshoi director, had said the ballet would be staged in May next year, but Serebrennikov's detention raises fresh doubts about its eventual production.
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