Lee Jae-myung, chair of the Democratic Party, already faces four other trials including for bribery and other charges mostly tied to a $US1 billion ($A1.5 billion) property development scandal.
His legal battles have cast a cloud over his political fate and could jeopardise his expected bid to contest the next presidential race.
Prosecutors indicted Lee on breach of trust charges, accusing him of misusing some 106 million won ($A117,000) in taxpayers' money during his 2018-21 stint as governor of Gyeonggi Province, just south of Seoul, according to Yonhap News Agency.
The charges also include accusations that he allowed his wife Kim Hye-kyung to use a government vehicle for private reasons while labelling it as official usage, Yonhap said, citing the Suwon District Prosecutors' Office, which filed the charges.
Funds were also spent to pay for pricey meals, groceries or laundry for Lee's family, but documented as expenses for meetings with public employees or overtime pay, Yonhap said.
Lee, who narrowly lost to President Yoon Suk-yeol in the 2022 election and is widely expected to seek to run again in 2027, has not publicly commented on the latest indictment, but has previously denied any wrongdoing and described other charges against the couple as "political retaliation".
The Democratic Party on Tuesday condemned the indictment as "far fetched" and a "scheme to kill the president's political foe".
Breach of trust is punishable by 10 years in prison or a fine of up to 30 million won.
Any final prison sentence or a fine of one million won or more would strip him of his seat in parliament and his right to run in any elections for the next five years.
The ruling People Power Party said the case again raised the question whether Lee was qualified to hold public office.
In a related case, a district court last week fined Kim Hye-kyung 1.5 million won for violating election law by offering a meal to several politicians' spouses using Gyeonggi provincial funds after Lee launched his presidential bid in 2021.
On Friday, Lee was convicted for violating election law and sentenced to a one-year prison term suspended for two years.
Lee said he would appeal.
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