Until now, prosecutors have been using previously impaneled grand juries to issue subpoenas and gather evidence in an investigation that has spanned the better part of two years. Grand juries only sit for a few months at a time, while a special grand jury sits for a longer period of time.
Impaneling a special grand jury suggests the case has reached an advanced stage, but as yet there have been no charges filed.
Potential witnesses have been contacted in recent weeks about appearing before the special grand jury, the sources told ABC News.
Word of the special grand jury's existence was first reported by the Washington Post.
Manhattan District Attorney Cy Vance began investigating Trump's business practices based on the congressional testimony of Michael Cohen, who served as the former president's personal attorney and fixer.
One focus of the investigation includes whether Trump inflated the value of certain properties to obtain bank loans and deflated the value of those same properties to pay lower taxes, sources have told ABC News.
Vance has twice fought all the way to the U.S. Supreme Court to gain access to eight years' worth of Trump's personal and business tax returns.
"This is a continuation of the greatest Witch Hunt in American history," Trump said in a statement late Tuesday. "This is purely political, and an affront to the almost 75 million voters who supported me in the Presidential Election, and it's being driven by highly partisan Democrat prosecutors."