The allegations relate to Mr Olmert's time as Jerusalem mayor in the 1990s.
Mr Olmert, who resigned as prime minister in 2009, has already been charged in three unrelated corruption cases. He denies any wrongdoing.
The latest charges concern the construction of a luxury residential complex in Jerusalem called Holyland which is built on a prominent hilltop.
Prosecutors claim that millions of dollars changed hands illegally to facilitate a series of property deals.
Jerusalem's planning laws were altered to enable the complex to be built. The project's developers have also been charged in the case.
Haaretz newspaper describes the case as one of the largest corruption scandals in Israel's history.
The former prime minister denies any wrongdoing and has called the investigation a "witch hunt".
Mr Olmert was mayor of Jerusalem from 1993 - 2003, then became a minister in the Israeli cabinet. He took over as prime minister in 2006 after Ariel Sharon suffered a stroke.
His three-year premiership was dogged by corruption allegations, and he eventually agreed to stand down.
Mr Olmert has pleaded not guilty in the separate proceedings against him, in which he is accused of taking cash for favours and double-billing for overseas trips.

The city was brought to a standstill on 15 December last year when a gunman held 18 hostages for 17 hours.
Family members of victims Tori Johnson and Katrina Dawson were in attendance.
Images of the floral tributes that filled the city centre in the wake of the siege were projected on to the cafe and surrounding buildings in an emotional twilight ceremony.
Prime Minister Malcolm Turnbull gave an address saying a "whole nation resolved to answer hatred with love".
"Testament to the spirit of Australians is that with such unnecessary, thoughtless tragedy, an amazing birth of mateship, unity and love occurs. Proud to be Australian," he said.
How the Sydney siege unfolded
New South Wales Premier Mike Baird has also announced plans for a permanent memorial to be built into the pavement in Martin Place.
Clear cubes containing flowers will be embedded into the concrete and will shine with specialised lighting.
It is a project inspired by the massive floral tributes that were left in the days after the siege.
"Something remarkable happened here. As a city we were drawn to Martin Place. We came in shock and in sorrow but every step we took was with purpose," he said on Tuesday.
The former Israeli prime minister, Ehud Olmert, has been charged with taking bribes in a property scandal.
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Crowds have gathered in Sydney's Martin Place to honour the victims of the Lindt cafe siege, one year on.