The case is being handled jointly by China's National Administration of Surveying, Mapping and Geo-information and the Ministry of State Security.
The involvement of the top intelligence authority underscores the seriousness of the case, the Hong Kong-based South China Morning Post reported.
"We understand that espionage is a serious charge against a world famous company," said an official from the administration.
"We are still in the process of gathering information", the report said.
"What we can say for now is that many subsidiaries of Coca-Cola are involved and this happens in many provinces. Due to the sheer scale of the case, the complexity of the technology involved and the implication to our national security, we are working with the Ministry of State Security on this," the official said.
The news came after Li Pengde, deputy director of the administration openly accused the beverage giant on a national radio programme on Tuesday and said some of its employees were caught using hand-held GPS devices to collect sensitive geographic information in Yunnan province.
Coca-Cola said the GPS devices were used to improve fuel efficiency and customer service.
Coca-Cola issued a statement saying it was "co-operating fully" with the investigation.
It said the GPS they used were "digital map and customer logistic systems commercially available in China".
The GPS devices were used to improve fuel efficiency and customer service, the company said.
Many Western companies use GPS devices to track the whereabouts of their employees as a way to improve efficiency and better planning.
China has been accused by the US of a role in cyber attacks and espionage with an American congressional report last year naming the country as "the most threatening actor in cyberspace".
The issue has become a growing bone of contention between Washington and Beijing. On Tuesday, US Director of National Intelligence James Clapper told a Senate committee that cyber attacks and cyber espionage had supplanted terrorism as the top security threat facing the country.
Beijing: China has launched an anti-espionage investigation against US-based Coca-Cola for allegedly conducting illegal mapping in many sensitive areas of the mainland, a move that may escalate a spying row between Beijing and Washington.
First Published: Thursday, March 14, 2013, 15:40