Details of the charges weren't immediately announced by prosecutors on Monday, but the hip-hop mogul has faced a stream of allegations by women in recent months who accused him of sexual assault.
The US attorney in Manhattan, Damian Williams, said in a statement that federal agents arrested Combs.
"We expect to move to unseal the indictment in the morning and will have more to say at that time," he said.
The federal investigation of the 58-year-old Combs was revealed when Homeland Security Investigations agents served simultaneous search warrants and raided Combs' mansions in Los Angeles and Miami on March 25.
His defence lawyer Aaron Dyer the day after the raids called them "a gross use of military-level force," said the allegations were "meritless". He said Combs was "innocent and will continue to fight" to clear his name.
Combs, then known as Puff Daddy, was at the centre of the East Coast-West Coast hip-hop battles of the 1990s as the partner and producer of the Notorious B.I.G., who was shot and killed in 1997. But like many of those who survived the era, his public image had softened with age into a genteel host of parties in Hollywood and the Hamptons, a fashion-forward businessman, and a doting father who spoiled his kids, some of whom lost their mother in 2018.
But a different image began emerging in November, when his former protege and girlfriend, the R&B singer Cassie, became the first of several people to sue him for sexual abuse with stories of a steady stream of sex workers in drug-fuelled settings where some of those involved were coerced or cajoled into sex.
In her November lawsuit, Cassie alleged years of abuse, including beatings and rape. Her suit also alleged Combs engaged in sex trafficking by "requiring her to engage in forced sexual acts in multiple jurisdictions" and by engaging in "harbouring and transportation of Plaintiff for purposes of sex induced by force, fraud, or coercion". It also said he compelled her to help him traffic male sex workers Combs would force Cassie to have sex with while he filmed.
The following day, in his first real acknowledgement of wrongdoing since the stream of allegations began, Combs posted a social media video apologising, saying "I was disgusted when I did it" and "I'm disgusted now".
Cassie's lawsuit was followed by at least a half-dozen others in the ensuing months.
In February, a music producer filed a lawsuit alleging Combs coerced him to solicit prostitutes and pressured him to have sex with them.
Another of Combs' accusers was a woman who said the rap producer raped her two decades ago when she was 17.
Another woman who filed a lawsuit, April Lampos, said she was a college student in 1994 when she met Combs and a series of "terrifying sexual encounters" with Combs and those around him began that lasted for years.
Combs and his lawyers denied nearly all of the lawsuits' allegations.
While authorities did not publicly say that the lawsuits set off the criminal investigation, Dyer said when the warrants were served that the case was based on "meritless accusations made in civil lawsuits."
The AP does not typically name people who say they have been sexually abused unless they come forward publicly as Cassie and Lampros did.
As the founder of Bad Boy Records, Combs became one of the most influential hip-hop producers and executives of the past 30 years. Along with the Notorious B.I.G. he worked with a slew of top-tier artists including Mary J. Blige, Usher, Lil Kim, Faith Evans and 112.
Combs' roles in his businesses beyond music - including lucrative private-label spirits, a media company and the Sean John Fashion line - took major hits when the allegations arose.
The consequences were even greater when the leaked beating video emerged. Howard University cut ties with him, and he returned his key to the city of New York at the request of the mayor.
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