Kwak Ji-hwa, a spokesman for the sect, Clonaid, said it made a Korean woman pregnant with a cloned embryo, with help from Korean company BioFusion Tech.
But Kwak refused to provide details about the surrogate mother, or further details about his organisation.
Lee Jae-yong, a health ministry director, said South Korea has no law banning human cloning.
The investigation will focus on whether the companies violated existing laws that ban unlicensed, unethical medical activities or practices, he said.
Alarmed by the controversy, South Korea said it will accelerate efforts to enact its first law against human cloning.
“Whether the claim is true or not, it has become more imperative that we enact such a law at the earliest possible date,” said Kim So-hui, another ministry official.
Clonaid was founded in 1997 by the Raelian Movement, a sect that believes life on earth was created by clones of extraterrestrials.
The Raelian Movement claims to have 55,000 members worldwide.
Most members of the scientific community are opposed to cloning for reproductive purposes, citing numerous birth defects and other serious problems affecting cloned animals.