It comes after emails appeared to show conversations between the pair about political matters while Lord Mandelson was serving as business secretary and the de-facto deputy prime minister in 2009, in Gordon Brown's government.
Politics live: How did we get here with Peter Mandelson?
The SNP, Lib Dems and Plaid Cymru had all called for a formal police inquiry, alleging potential misconduct in public office.
Commander Ella Marriott, of the Metropolitan Police, said: "Following the further release of millions of court documents in relation to Jeffrey Epstein by the United States Department of Justice, the Met received a number of reports into alleged misconduct in public office including a referral from the UK government.
"I can confirm that the Metropolitan Police has now launched an investigation into a 72-year-old man, a former government minister, for misconduct in public office offences.
"The Met will continue to assess all relevant information brought to our attention as part of this investigation and won't be commenting any further at this time."
Lord Mandelson is set to step down from the House of Lords following the latest revelations.
Documents released by the US Department of Justice on Monday indicate Epstein was sent internal discussions from the heart of the UK government after the global financial crisis.
That includes emails in which Lord Mandelson appeared to tell Epstein he was "trying hard" to change government policy on bankers' bonuses, and to confirm an imminent bailout package for the euro the day before it was announced.
The peer also appeared to write to Epstein in June 2009 about an "interesting note that's gone to the PM", forwarding an assessment by Mr Brown's adviser Nick Butler of potential policy measures including an "asset sales plan".
Downing Street earlier said the Cabinet Office had referred how Lord Mandelson handled sensitive government information while he was a minister to the Metropolitan Police.
Mr Brown also said he had written to the force's commissioner, Mark Rowley, about Lord Mandelson's contact with Epstein.
The former PM said the alleged leak was "an inexcusable and unpatriotic act at a time when the whole government and country were attempting to address the global financial crisis that was damaging so many livelihoods".
Lord Mandelson's representatives have been contacted for comment.
He has previously said: "I was wrong to believe Epstein following his conviction [in 2008 for procuring a child for prostitution and of soliciting a prostitute] and to continue my association with him afterwards. I apologise unequivocally for doing so to the women and girls who suffered."
And in an interview with The Times carried out last week but published on Monday, Mandelson referred to a "handful of misguided historical emails, which I deeply regret sending".
On other claims, Lord Mandelson questioned the authenticity of the documents, citing false claims he had a US social security number, questionable US-dollar cheque payments into UK banks, incorrect beneficiary details, and multiple basic errors in dates, spelling and formatting.
Investigation 'inevitable'
Conservative leader Kemi Badenoch said the news of the police investigation was "inevitable" and "welcome".
She added: "We should not let this distract us from the fact the prime minister has his fingerprints all over this.
"He knew all of the allegations, concerns and reports about Peter Mandelson, knew that he was a close friend, an associate, of a convicted paedophile, and he still gave him the biggest job in the Foreign Office, at a time when UK-US relations are at a critical point.
"That's what he chose to do, and he's got a lot of questions to answer."
This is in reference to Lord Mandelson's public relationship with Epstein at the time he was chosen to be ambassador to the US (December 2024) and then appointed (February 2025).
He quit that position in September after new emails revealed that he sent messages of support to Epstein even as he faced jail for sex offences in 2008.
The revelations that have come out in recent weeks are a result of new documents published by the US Congress, and Downing Street has said it was not aware of these allegations until they were made public in recent days.
Jess Michaels claims she was raped by Epstein in his penthouse after meeting him as a 22-year-old professional dancer in 1991.
Speaking to Sky News' Jonathan Samuels on The World she said she hoped "that justice would finally happen" but said there are "extreme redactions and then extreme neglect to (not) redact".
Follow latest: Police launch investigation into Mandelson claims
Lawyers for the survivors have criticised the US Department of Justice's redactions of personal information from the Epstein files released on Friday, with the identity of at least one woman who had not previously come forward with allegations having been revealed.
"A five-year-old could have done a better job redacting these files with colour-coded crayons. It is an embarrassment that our Department of Justice put this out as their very best work," Ms Michaels said.
"It is shocking the damage this department of justice has done with the way that they have released survivors' personal information out there, when they literally had one job, which was to redact survivors' names."
Ms Michaels added: "I was willing to give the benefit of the doubt that it was just sloppy incompetence.
"But now it feels almost like it's purposeful to intimidate survivors, to punish survivors, to discredit survivors, and then not to hold the perpetrators actually guilty."
Survivor says files redacts 'powerful people'
Another survivor, Lisa Phillips, agreed that the US Department of Justice's latest release of Epstein files "had a lot of redactions of people, powerful people... that were there" with the disgraced financier.
She said "we should be able to see who those people are".
The US Department of Justice, in a court filing on Monday, said it was in the process of "removing documents that inadvertently were produced and contain victim-identifying information".
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The latest release of the files contained further revelations of Andrew Mountbatten Windsor and Peter Mandelson's relationship with Epstein.
Both men have always denied wrongdoing.
Ms Michaels said "anyone that spent any significant time with Jeffrey Epstein should be called to testify before Congress".
Ms Phillips, who said she once met Andrew at the pool on Epstein's island, said "everybody wants to hear" him testify.
She added: "I would be the first person to want to hear about that testimony."
Epstein died in prison in 2019 while awaiting trial on sex trafficking charges.
The crash happened in a farmland area in Littleborough, Rochdale, shortly after 11am.
Greater Manchester Police said two men were found and they were pronounced dead at the scene.
It is not believed there was anyone else on board and there were no reported injuries on the ground.
Chief Superintendent Danny Inglis said: "This is a devastating incident where two people have lost their lives and our thoughts are with their families and friends.
"We have been working closely with emergency service colleagues and partner agencies throughout the day to establish the full circumstances and we will be on scene overnight and into tomorrow.
"There will be an enhanced presence as officers and investigators comprehensively survey the area and ensure all available evidence is recovered.
"If anyone has any information, or witnessed the crash, we would urge you to get in touch with us."
Photos shared on social media appear to show a yellow parachute partly wrapped around the base of an electricity pylon.
There are reports that the aircraft which crashed is a Cirrus SR20, a plane which is fitted with a parachute system designed to deploy in an emergency.
The flight tracking website, flightradar24, posted a message on X showing an image of a Cirrus aircraft, believed to be involved in the accident.
It said a plane departed Birmingham Airport at 9.59am and the last signal was received at around 10.39am "south of the M62 motorway near Marsden". It has not officially been confirmed whether this is the aircraft which crashed.
A Birmingham Airport spokesman confirmed a private light aircraft left its XLR Executive Jet Centre at around 10am on Tuesday.
Other images from the scene show a large response from the emergency services, with several fire engines, police and ambulance vehicles.
The Air Accidents Investigation Branch (AAIB) issued a statement related to the crash.
"An accident involving a light aircraft which occurred today (3 February) near Rochdale, Greater Manchester has been notified to the AAIB.
"An investigation has been launched and a multidisciplinary team of inspectors are on their way to the accident site."
Cancer destroys far too many lives. According to the charity Macmillan, someone in the UK is diagnosed with the disease at least every 75 seconds. That is a grim statistic.
On Wednesday, the government will publish a new 10-year plan to tackle it, pledging that more people will survive a diagnosis in the coming years.
This cancer plan says it puts "patients at the very heart of it". Eleven thousand people responded to the call for evidence: stories of resilience against the odds, personal battles against a healthcare system buckling under the cancer burden.
The metrics are quantifiable. In around 10 years time, three out of four people diagnosed with cancer will be living well or cured from cancer within five years of their diagnosis.
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According to the Department of Health, this would represent the fastest rate of improvement in cancer outcomes this century, and would translate to 320,000 more lives saved over the lifetime of the plan.
The document will also pledge that the NHS will meet all its cancer waiting time targets by 2029, and is set to be joined with other announcements, including a big expansion in robot-assisted surgery and faster diagnostic tests to cut down delays in cancer diagnosis and treatment.
This is achievable. But it will take commitment and investment.
The Danes have done it. They have had five successive national cancer plans.
Our health ministers have been studying their blueprint very carefully to apply the most successful interventions into our own plan.
Smaller organisations working at a local level will be empowered and financed to support their own communities. This is practical and sensible.
Some £6bn has been earmarked for capital investment to invest in the latest technology, AI and robotic surgery to identify and treat cancer quickly.
Cancer is indiscriminate. So children and young people will, for the first time, be given a dedicated chapter in this plan to meet their own special needs.
According to the latest data from the World Health Organization, four in 10 cancer cases are preventable.
It has examined 30 preventable causes, including tobacco, alcohol, high body mass index, physical inactivity, air pollution, ultraviolet radiation, and, for the first time, nine cancer-causing infections.
This area will come under renewed focus after the government's success in introducing the Tobacco and Vapes Bill to ensure an entirely smoke-free generation.
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Community Diagnostic Centres easily accessible with a high street presence, and open for days and hours that suit ordinary people, will speed up diagnoses.
And importantly, as science makes great strides in extending life, survivors must not be left alone to face the "cancer cliff edge", the feeling of abandonment after their cancer treatment has finished.
Survivorship is as important as early diagnosis.
All of this is to be welcomed and applauded, but to move to this level will need a big step change.
Many hospitals still cannot share imaging or pathology results in a timely way due to old technology holding them back.
And some estates are not fit for purpose, let alone to house a specialist cancer ward.
I have stood under gaping ceiling holes where rain pours through into overflowing buckets, feet away from patients undergoing chemotherapy.
Cancer patients have been failed for far too long.
William Stevenson, 77, was indicted on Monday by a grand jury in New Castle County, Delaware, in connection with the death of 64-year-old Linda Stevenson last year.
Mrs Biden married Stevenson in February 1970, when she was 18 years old and a student at the University of Delaware, and he was 23.
They were only married for five years. In March of 1975, she met then Democratic senator for Delaware Joe Biden, and a civil divorce between her and Stevenson was granted in May of that year.
New Castle County Police said Stevenson was taken into custody at the home in Oak Hill without incident on Monday afternoon.
He has since been arraigned and sent to the Howard Young Correction Institution in Wilmington, where he has been unable to pay a $500,000 (£365,207) cash bail.
According to authorities, at around 11.16pm on 28 December, officers responded to a reported domestic dispute at a residence in Oak Hill, just west of Wilmington in New Castle County.
Upon entering the home, emergency services found Mrs Stevenson unresponsive in the living room. She was later pronounced dead at the scene.
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Delaware state police say Mrs Stevenson's body has been turned over to the Delaware Division of Forensic Science, where a post mortem examination will be conducted to determine the cause and manner of her death.
The office of Jill and ex-president Joe Biden declined to comment to Sky's US partner network NBC News.