Chen could be heard shouting, "This is a political persecution" and "Cheers for Taiwan," as he was being led away. Chen said Monday night he believed his arrest was imminent. He linked it to attempts by newly installed Taiwanese President Ma Ying-jeou to placate China, following violent protests last week against a visiting Chinese envoy.
Chen, who has denied any wrongdoing, is an ardent supporter of Taiwanese independence, a cause decried by Beijing, which insists that Taiwan is part of Chinese territory. China has threatened war if the island moves to make its 59-year break with the mainland permanent.
"Long live Taiwanese democracy," Chen declared to his supporters outside the prosecutors' office. "Long live Taiwanese independence."
Chen faced more than five hours of questioning Tuesday in connection with his alleged role in what prosecutors say was a money-laundering scheme.
There has been no official statement from prosecutors on the case.
Chen has been the object of a six-month probe into allegations he laundered money and made illegal use of a special presidential fund during his eight years in office that ended in May.
Two of Chen's senior advisers already have been arrested in the case.
Several dozen activists shouted slogans of support for Chen on Tuesday, while a heavy contingent of police were deployed around the building.