Nine people are under investigation after Italy's financial police carried out searches at Milan City Hall and the company owned by Inter and AC Milan which manages the San Siro, according to media reports.
Those being investigated include the former CEO of Inter, Alessandro Antonello, representatives from both clubs and the city of Milan's general manager, Christian Malangone, who has been described as Mayor Giuseppe Sala's right-hand man.
Accusations of bid rigging centre on the manner in which the 197 million euros (£171m) sale of 28 hectares of public land on which the San Siro sits was approved in late September.
Inter and AC Milan are planning to knock down the San Siro after having built a new 70,000-capacity arena on the land immediately to the west of the current stadium.
City council officials are alleged to have favoured private interests to the detriment of the public good and by using a law designed to simplify the process of stadium building to favour certain construction companies.
The probe into the sale, completed in November, comes after a wide-ranging investigation into alleged corruption in the city's urban planning.
Former urban planning councillor, Giancarlo Tancredi - whose arrest last summer from the broader investigation was annulled by Italy's highest court in December - is again being investigated by Milan's public prosecutor's office.