The Independent columnist and interviewer, who was shortlisted prior to his 2008 win and also entered this year's prize, was accused of plagiarism after quotes from several of his interviews were shown to have been taken from other books and from interviews by other journalists.
A statement from the Prize today said that "given the seriousness of the allegations", it had "no choice but to investigate further".
"The Council of the Orwell Prize takes the integrity and reputation of the Orwell Prize, and the rigour, fairness and transparency of the entry and judging process, very seriously.
"As stated on Tuesday 28th June, there is a process to follow in such situations, which we have been following since Monday and continue to pursue."
According to today's statement, The Orwell Prize has written to both Hari and the editor of the Independent, Simon Kelner to inform them of the investigation. The Prize has also been in touch with the 2008 judges, Annalena McAfee, Albert Scardino and Sir John Tusa.
Prior to giving the award, The Prize contacted Kelner, "who expressed his full confidence in the Hari articles".
The winning articles included pieces on France's "secret war" in the Central African Republic, multiculturalism and women, and US right wing politicians.
Speaking on the Media Show on BBC Radio 4 yesterday, Kelner defended Hari, claiming that the reaction against him was "politically motivated" and "fabricated anger".
He confirmed that the Independent would be conducting an internal investigation into the articles it had published and the editors responsible, but indicated that the columnist would not face disciplinary action.
More evidence of material being apparently lifted from elsewhere emerged following Kelner's appearance, including a 2006 interview by Hari with Hugo Chavez that looks to contain quotes lifted from a 2001 interview with the Venezuelan leader by Jon Lee Anderson, published in the New Yorker.
Hari apologised for his actions in the Independent on Wednesday, claiming that he had never "taken words from another context and twisted them to mean something different", and had "only ever substituted clearer expressions of the same sentiment, so the reader knew what the subject thinks in the most comprehensible possible words".
The Prize, which is divided into three awards for journalism, books, and blogging, carries a £3,000 award for each winner.