The Financial Reporting Council (FRC) said it will take a closer look at the professional services firm's audit of the retailer for the year ended 30 August 2014.
A PwC spokesperson said: "We will co-operate fully with the FRC in its enquiries."
The FRC has previously been urged to carry out an investigation into the advisers involved in the £1 sale of BHS to Retail Acquisitions in 2015.
MP Richard Fuller wrote to the watchdog in April, not long after the troubled retailer was put into administration, while Simon Walker, director general of the Institute of Directors (IoD), approached the FRC with a similar query earlier this month.
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Commenting on today's announcement, Fuller told City A.M. that he acknowledged the FRC's decision as "good news". He explained that he wrote his original letter because companies involved in deals "rely on auditor's statements" and he wanted to know "were all the rules followed" by the advisers.
Meanwhile, Oliver Parry, head of corporate governance at the IoD, told City A.M. that the IoD not only welcomed the investigation, but also that it had been picked up less than a month after the Walker's letter.
Although the watchdog wrote back to both to say it was looking into what it could do, it did stress its powers to investigate were limited to accountants, auditors and actuaries who were members of the corresponding representative body. This essentially means it cannot investigate parties such as company directors if they are not part of the accountancy industry.
Fuller is a member of the Business, Innovation and Skills (Bis) committee, one of the bodies to launch an inquiry into the events surrounding the collapse of BHS. The Bis committee inquiry is focused on the £1 sale, while the Work and Pensions committee is examining the what the retailer's demise means for pensions regulation.
The committees have already taken evidence from a number of advisers involved in the BHS sale, and two more evidence sessions are due to take place later on this week.
However, members of the committees have previously voiced their frustrations at the amount of confusing evidence the sessions are unearthing, with Work and Pensions committee chair Frank Field at one point saying that the questions they had asked had "prompted more questions than answers".
"The Bis and Work and Pensions joint inquiry into the sale and acquisition of BHS has raised significant questions about such vital matters as the signing off of BHS's accounts as a going concern," said Iain Wright, chair of the Bis committee. "'I'm pleased the FRC have finally agreed to look into this issue."