Jason Krasley, 47, surrendered to authorities on Friday and was later released on $100,000 unsecured bail.
The alleged theft happened after a drug raid on a barbershop in 2019.
Police seized cocaine, drug paraphernalia, and cash. An evidence inventory receipt at the time showed $16,000 in cash among the seized items.
However, the district attorney said, a second inventory receipt was completed at the Allentown Police Vice Office indicating that $10,500 in cash was found.
An investigation concluded that Krasley stole the missing $5,500, said District Attorney Gavin Holihan.
Krasley is charged with theft and tampering with evidence.
He served on the force from 2002 to 2021.