The announcement, which was expected, comes after criticism of the Justice Department's handling of the investigation, particularly on how the public was notified about the controversy, which was a major issue on the 2016 campaign trail.
It will likely mean questions over the role of FBI Director James Comey in the fading days of the election, which Democrats believe helped cost them the presidency, will linger on long into the administration of Donald Trump.
Justice Department Inspector General Michael E. Horowitz said the decision to initiate a review was prompted by requests from numerous members of Congress and public inquiries.
Horowitz's office said the review will examine several allegations, including that DOJ or FBI policies were not followed when Comey publicly stated last July that his bureau would not pursue criminal charges against Clinton; that DOJ and FBI employees improperly disclosed non-public information; and that the timing of the FBI's release of certain Freedom of Information Act requests right before the election was improper.
The White House said Thursday it wasn't involved in the decision to investigate.
"Decisions that are made by inspectors general across the administration are independent, and this administration has assiduously protected the independence of inspectors general," White House Press Secretary Josh Earnest said at a briefing.
A message left with Clinton's office was not immediately returned. Rep. Jason Chaffetz, who chairs the House Oversight Committee, tweeted
his support of the investigation.
CNN's senior legal analyst Jeffrey Toobin said news of the probe provoked some interesting questions for the new administration, since the tenure of Horowitz, as a political appointee, ends along with the Obama administration ends.
"There is a tradition that some presidents allow some inspector generals to stay on and complete. One of the questions that (Trump's nominee for attorney general) Jeff Sessions will surely be asked now ... is will he allow this investigation to continue? Will they appoint a new inspector general?" Toobin told CNN's Brooke Baldwin.
"I think we all agree that this is something that is perfect for what inspector generals are supposed to do, but who does this investigation? Does it continue in the new administration? All of that is unsettled right now."
Democrats were furious when Comey wrote to lawmakers less than two weeks before the election announcing the discovery of emails potentially relevant to its investigation of Clinton's handling of classified information. The emails, which were found on a laptop, was unearthed as part of a probe into sexting allegations against Anthony Weiner, the estranged husband of the Democratic candidate's top aide, Huma Abedin.
The move allowed Trump to argue that the investigation against Clinton, which he had used to cast doubt on her character and integrity throughout the campaign, was once again deserving of voters' attention.
A few days before the election, Comey wrote to lawmakers again to say that based on a review of emails, the agency had not changed its opinion that Clinton should not face criminal charges.
But Democrats say his move came too late and have said that the initial letter stalled her momentum during the final two weeks of the campaign. The FBI's supporters however say Comey had an obligation to inform Congress of an update to his earlier testimony about the case.
But Democrats complained that Comey's conduct infringed precedents that dictate that the FBI does everything it can to avoid being drawn into the final stages of a US election.
"In fact, to show how awful this situation is, this man ignored precedent that had been going on for decade after decade after decade. The FBI does not get involved in politics -- except Comey did," former Senate Democratic Minority Leader Harry Reid told CNN's Manu Raju in an interview last month.
"Had he not written that letter a week or so before the election, she would have won; we would have picked up at least two more Senate seats," he said.
The Trump camp has been sensitive to any suggestions that the President-elect's victory in November was not legitimate, a stance it has also adopted to challenge claims by Democrats that alleged Russian hacking of the party's computer servers and emails from the Clinton campaign also influenced the result.