A formal investigation was launched against Lagarde in 2014 for negligence in not challenging the massive state payout to Tapie during her time as finance minister in 2008.
Tapie had accused the partly state-owned bank Credit Lyonnais of defrauding him by undervaluing Adidas when he sold the sports company in 1993.
The arbitration resulted in Tapie being awarded a payout of 403 million euros.
This decision was overturned in February after years of court proceedings with Tapie being ordered to pay back the money at the beginning of this month.
Investigating judges have probed whether the arbitration was a ‘sham’ organised to reward Tapie for his support of former French President Nicolas Sarkozy.
Lagarde, who has consistently denied having acted on Sarkozy’s orders, said in a statement that she would fight the trial order.
Meanwhile, according to the IMF's spokesman, the executive board of the world monetary body expressed its confidence in the Lagarde’s ability to effectively carry out her duties.
This is not the first time that a French boss of the world's leading financial institution has been hit by a scandal.
Former French IMF chief Dominique Strauss-Kahn was forced to step down in 2011 after being accused of sexual assault by a New York hotel maid.
Meanwhile, French Finance Minister Michel Sapin said Lagarde is presumed innocent and perfectly capable of continuing to assumer her responsibility.