Fredericks, who won four silver medals at the 1992 and 1996 Games, is suspected of receiving bribes and laundering the money through Paris, a source close to the inquiry in France said on Friday. He appeared before a French magistrate on Thursday.
Fredericks has previously rejected allegations of corruption.
The IOC said in a statement that its executive board had decided to suspend Fredericks after "considering the gravity and urgency of the situation and its impact on the reputation of the IOC."
Fredericks is already being investigated by the global Athletics Integrity Unit over payments he received from Papa Massata Diack, the son of former world athletics chief Lamine Diack, on the day Rio won the vote to host the 2016 Olympics.
Fredericks has previously said that a payment of $300,000 (£228,372) to his company was recompense for legitimate work.
Fredericks also sat on the IAAF Council, world athletics' governing body, until he was suspended in July pending the outcome of the Integrity Unit probe.
Rio was awarded the games in 2009, beating Chicago, Tokyo and Madrid.
Last month, the IOC suspended the head of Brazil's national Olympic committee, Carlos Nuzman, after he was charged in Brazil with racketeering in connection with alleged vote buying to win the Games for Rio.
Nuzman is accused of arranging more than $2 million in bribes to get the IOC to pick Rio. He has denied any wrongdoing.
(Reporting by Brian Homewood; Editing by Toby Davis)
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