Josef Wesolowski was defrocked in June after a Vatican court found him guilty of abuse.
This was the first time a high-ranking Vatican official has ever faced criminal abuse charges.
In a statement, the Vatican said the ex-archbishop had medical conditions that meant he was not able to be kept in a cell and instead would be placed under house arrest.
It is alleged that Polish-born Wesolowski paid boys to take part in sex acts while he was working in the Dominican Republic.
Authorities in the Caribbean country had opened their own investigation but were unable to take it further because he had diplomatic immunity.
After he was defrocked, Wesolowski lost that right and a court in the country has now started the process towards charging him.
If Wesolowski is found guilty he could face time in jail, but it is unclear where he would serve his sentence.
The case has been watched closely around the world to see how Pope Francis would deal with an allegation of sex abuse against such a high-ranking official.
The pontiff had previously said that no prelate, whether a priest or a cardinal, has any privileges when it comes to sex abuse.