Prosecutors had asked for Saimir Tahiri to be taken into custody, but Denion Ndrenika, spokesman for the Prosecutor General's Office, said a court placed him under house arrest instead, The Associated Press reports.
Tahiri, 48, was interior minister during 2013-2017 in Albania's Socialist government and resigned as a lawmaker a week ago. He is accused of links to a criminal group suspected of trafficking large amounts of cannabis. Some of the trafficking network's leaders were arrested in Italy and Albania.
Tahiri has strongly denied connections to the group. He has been under investigation for seven months.
If convicted on both drug and corruption charges, he faces a maximum prison sentence of 15 years.
Tahiri's attorney, Maks Haxhia, said prosecutors have not presented any new evidence that justifies limits on his client's freedom. Haxhia said he would appeal the house arrest decision issued by the Serious Crimes Court in the capital, Tirana.
Prime Minister Edi Rama said he respects the court's decision and called for "an independent, transparent process."
The US Embassy in Albania welcomed Tahiri's arrest, saying in a statement that "this important corruption case will be decided fairly and transparently in the courts."