GardaI are probing whether current and former health service staff recklessly endangered intellectually disabled children.
The investigation aims to discover if workers allowed youngsters to be placed, or remain, in a foster home at the centre of physical and sexual abuse allegations.
The probe is focused on "actions or inactions" of health board and HSE staff over a 30-year period up to 2009.
The families of children who used the home have been interviewed by gardai in recent months, it has been reported.
Sources said the garda probe began in August 2015 after a social worker made a complaint.
The disclosure came as the HSE issued an "unreserved and heartfelt" apology to former residents, who it admits were failed during their stay at the foster home in the south east.
Five current HSE employees and six Tusla staff are expected to face disciplinary proceedings following the publication yesterday of two damning reports on the care of those children.
One of the intellectually disabled children, now a woman known as Grace, was left in the home for almost 20 years, despite a succession of sexual abuse allegations and other evidence she was being mistreated.
Speaking in the Dail yesterday, Taoiseach Enda Kenny said the treatment of 'Grace' is a "disgrace to us as a country".
"The very least this House can do is apologise to Grace and her family," he added.
The Government is to establish a Commission of Investigation to examine the case, with disabilities minister Finian McGrath bringing terms of reference to Cabinet next week.
HSE Disability Services head of operations, Dr Cathal Morgan, said he had seen no evidence to support claims of a cover-up by HSE staff.
However, he said: "It is patently obvious from reading the reports that action could have been taken," adding there was "no doubt" interventions "would have made a difference".
"You don't need to be a rocket scientist to understand that at a very human level when something is being identified as a very clear and obvious risk, you act," he said.
"Clearly, action wasn't taken. These are matters from the HR side that will have to be seriously dealt with."
One of the reports published yesterday - by Conal Devine and Associates - examined the care of Grace, and was completed in 2012. The other, by consultants Resilience Ireland, examined the care of 34 other children and was completed in 2015.
Publication of both reports was delayed until yesterday at the request of gardai. A list of staff at the centre of the reports has been shared by the HSE with Tusla in the past fortnight.
Findings against individuals will be put to them and they will be allowed to respond.
Tess O'Donovan, HSE assistant national director for human resources, said under HSE policies it was possible to dismiss individuals in cases of gross misconduct but she declined to comment on people implicated by the reports.
The HSE's chief officer in the south east, Aileen Colley, said the five HSE staff were no longer working with children.
But Tusla would not disclose if its six staff are currently working directly with children.
Tusla said it had completed an initial HR review and would be studying the reports and liaising with gardai before deciding on further action.
No disciplinary action can be taken against retired former health service employees.
Retirees include three people who sat on a committee which overturned an earlier decision to remove Grace from the home in 1996, after another family's claims of sexual abuse against the male foster carer.
Inexplicably, the committee decided not to refer any more children to the foster home but decided Grace should stay.
Gardai previously investigated allegations about the foster home and files were sent to the Director of Public Prosecutions.
It had focused on the family running the home but ran into difficulties securing evidence or statements due to the disabilities of the children involved.