The Election Commission, seemingly stacked with Najib loyalists, announced that the opposition coalition had won a majority of parliamentary seats, and the Malaysian king provided an audience to Mahathir and named him prime minister.
Najib has denied any wrongdoing and was cleared by the attorney general at the time, while the fund has consistently denied any misconduct.
The 92-year old prime minister returned to power on Thursday following a victory of his alliance, Pakatan Harapan, on Wednesday, forcing Najib out after 11 years in power.
In an interview with Reuters, panel member Lim Chee Wee said then Attorney-General Mohamed Apandi Ali had been presented with evidence by MACC in 2015 that Mr Najib had received RM42 million from 1MDB unit SRC International.
Malaysia, under former Prime Minister Najib Razak, had classified the audit report in 2016 under the Officials Secrets Act when the fund's financial troubles were being investigated.
"We think that within a short while we will have a case against him", Mahathir said. He and the fund have denied wrongdoing.
Najib is accused of misappropriating billions of dollars through his pet project state fund 1Malaysia Development Berhad (1MDB), and making deposits into his private accounts worth up to $1 billion.
The report found, among others things, that 1MDB used 288 million ringgit ($73 million) of government funds to pay interest on its debt, which isn't in line with the fund's original objective.
Dr Mahathir personally ordered travel restrictions on Mr Najib on Saturday after news spread that the latter was about to fly off to Jakarta for a break.
Irwan, who also served as chairman of 1MDB, would also be barred from leaving the country, government sources told BenarNews.
Mahathir, during his news conference at the administrative capital Putrajaya, said the government chose to bar certain individuals from leaving the country because their assistance was needed for the 1MDB probe.
Mahathir also said that ministry officials had been instructed not to destroy important documents.
To this day, Mahathir maintains he sacked Anwar following advice from the police, and that it was the courts who decided Anwar's fate - not him.
In comments to a business conference on Tuesday, Mahathir confirmed the jailed leader will be released on Wednesday but said "I don't know what time". USA investigators say some US3.5 billion was misappropriated from the fund.
The US State Department alleges that at least $4.5 billion dollars was looted from the fund, and funnelled to the United States where it was used to buy everything from artwork to high-end real estate and a luxury yacht.
Mahathir also faced criticism for saying that a controversial law passed before the election that punishes "fake news" with up to six years in jail would be reviewed rather than revoked.
"Even though we support freedom of the press and freedom of speech, there are limits", Mahathir said, apparently backtracking from an election campaign promise to entirely abolish the legislation, which had been criticized as Najib's attempt to quell political dissent and freedom of speech in the run-up to the May 9 election. Singapore has punished banks over lapses related to 1MDB, seized assets and jailed bankers over the scandal.