"Have decided to file law suit against Daily Mail. The fabricated and misleading story was published at the behest of (Pakistan Prime Minister) Imran Khan and Shahzad Akbar," Sharif posted on Twitter on Sunday.
"We will also launch legal proceedings against them. Btw IK (Khan) has yet to respond to three such cases I filed against him for defamation."
Akbar is the Special Assistant to the Prime Minister on Accountability, Geo News reported.
In a report earlier on Sunday, the Daily Mail said that the UK's Department for International Development (DIFD) had given Sharif and his government taxpayers' cash and that he and his family were embezzling tens of millions of pounds of public money and laundering it to Britain.
The high-level probe was ordered by Khan after he came into power last year, the newspaper added.
"After winning election on a pledge to combat corruption, Imran Khan set up a special team to deal with it, the Asset Recovery Unit, headed by a UK-educated barrister.
"They have examined a series of suspicious transactions running to many millions and shown that Shehbaz's family's assets grew enormously during the years he was in power," it added.
Shortly after it was made public, the DFID discredited the Daily Mail's report, Geo News reported.
( With inputs from IANS )