Prosecutors accused Lee of having monetary ties to Park Geun-hye, President of South Korea. These alleged bribes are said to have totaled almost $38 million, and were allegedly made in exchange for the government looking favorably upon a Samsung business merger.
Lee was taken into custody in the Seoul Detention Centre and remained there while the court arrived at its decision in a closed-door hearing which ended on Thursday evening.
Both Samsung and Lee deny any wrongdoing.
The court back then argued that it was not clear whether the donations were made in exchange for favours, but prosecutors said that after three weeks of additional investigations they have obtained new evidence against Lee. But the case continued and new evidence incriminating the Samsung head was collected, leading to a second warrant and an arrest.
A request for an arrest warrant for Samsung Electronics president Park Sang Jin was rejected by the court.
"This is a blow to Samsung's image as a global player in the short term", HMC Investment Securities' analyst Greg Roh told AFP.
It is already reeling from the debacle over the recall of its flagship Galaxy Note 7 device and reports have suggested it could face sanctions from overseas authorities if Lee is punished.
Samsung, despite its global reach and vast product line, is still technically a "family" company, run with an opaqueness some investors are fighting, and the merger consolidated the Lee family's control.
Lee Jae-yong is accused of paying as much as $38 million to the close friend of South Korea's embattled president, Park Geun-hye, in return for political favors - like getting a company merger approved by the government.
Samsung was the single biggest donor to the foundations. The prosecution also alleged that Lee donated $3.1 million to a company Choi co-owned.
A warrant for his arrest was issued by the Seoul Central District Court early on Friday.
The princeling of the South Korea's richest family faced an immediate incarceration at a detention center south of Seoul, where he had been waiting for the announcement made at about 5:40 a.m. local time.
Park, whose powers were suspended in December by parliament, is awaiting a decision by the Constitutional Court on whether she will be permanently removed from the presidency.