Investigators claim he organized the embezzlement of at least 68 million rubles ($1.1 million) in state arts funding that was provided by the Culture Ministry between 2011 and 2014.
Serebrennikov has denied any wrongdoing.
A prominent Russian theater director who has lamented what he says is the lack of freedom and growing social conservatism in his country was detained on Tuesday and accused of embezzling state funds. The Center is noted for it's stagings of contemporary Russian Dramas and a lobby featuring neon-lit mirrors shaped like famous directors.
Serebrennikov's lawyer Dmitry Kharitonov told Kommersant FM radio that an investigator told him of the detention that morning and it was "a complete surprise".
Kirill Serebrennikov was detained overnight in a hotel in St. Petersburg, where he has been making a movie about the perestroika-era rock star Viktor Tsoi, and taken to Moscow for interrogation, state news agency TASS reported.
The detention of one of Russia's most sought-after directors has shocked the art community.
Serebrennikov, 47, is charged with large-scale fraud and could be sentenced to 10 years in prison if convicted.
'This is a very gifted and talented person.
Putin himself criticised the heavy-handed raids on Serebrennikov's home and workplace, telling the independent Dozhd TV channel they were "just ridiculous". Russian Federation media reported earlier this month that the accountant had testified against the director. Back then, Serebrennikov's apartment and Gogol Center, which he has headed since 2012, were searched, and he was called in for questioning.
The centre has been targeted by conservative activists, some of whom even installed a naked cutout of Serebrennikov outside.
Serebrennikov's productions have been sold out for years.
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 past year.
"Awful news. This thing - it's a "hello" from Meyerhold", said Akhedzhakova in comments published by Meduza, referencing the famed Soviet theatre director whose groundbreaking, often provocative, productions saw him arrested and eventually killed in 1940 during Stalin's Great Purge.