Wael Shalabi, secretary general of the council of state, an administrative court, was arrested at dawn and taken in for questioning, the sources said.
His arrest comes days after the Administrative Control Authority responsible for tracking corruption arrested the council's chief procurement officer, Gamal el-Labban.
Media reports said Labban was detained after a huge amount of cash was found at his home.
He reportedly had in his possession 24 million Egyptian pounds ($1.3 million, about 1.2 million euros) as well as $4 million and two million euros.
Prosecutors ordered Labban's detention for four days pending an investigation.
After Labban's arrest, Shalabi submitted his resignation to the council of state which accepted it on Saturday. In a statement, it also pledged to investigate all procurement contracts reached over the past five years.
A prosecution official on Sunday said Shalabi may be implicated because the procurement department at the council of state cannot finalise deals unless he signs the paperwork.
Recordings of calls made by Labban showed that Shalabi was "involved in many" aspects of the current investigation, said the prosecution official, speaking on condition of anonymity.
He gave no further details.
President Abdel Fattah al-Sisi, who has pledged tough economic reforms to cut public spending, has vowed to crack down on corruption.
On Wednesday, he said that anyone found guilty of wrongdoing would be prosecuted, stressing that "no one is too big for accountability".
It is rare for Egypt to investigate alleged corruption inside its judicial institutions.
Watchdog Transparency International ranks Egypt as 88th out of 168 countries on its corruption perceptions index.