A report from Chinese outlet Economic Information Daily last week said diapers from Huggies, Babycare and Bibabebe had tested positive for formamide, a toxic substance that can also cause dizziness.
The three diaper makers said in statements over the weekend that no formamide had been detected after third-party retesting.
Huggies said on Sunday it was taking legal action over "certain false, misleading and malicious brand-damaging information".
A probe has been launched with national health authorities, China's State Administration for Market Regulation said in its statement.
"The relevant information will be promptly announced," the watchdog said, without specifying a timeline for the investigation.
