The 48-year-old filed for bankruptcy in 2009 and is accused of later stealing and selling property from an $18.5 million estate.
Federal prosecutors brought 13 counts against Dykstra, including bankruptcy fraud, obstruction of justice, concealing property from the bankruptcy estate and other charges.
If found guilty on all charges, Dykstra faces a maximum of 80 years in prison.
Dykstra's attorney, Mark Werksman, said the case stems from a dispute with the bankruptcy trustee and no fraud was committed.
"He didn't belong in bankruptcy, he had a problem dealing with the trustees dismantling his property and investments," said Werksman.
In the indictment, prosecutors accuse Dykstra of lying about the true value of his bankruptcy estate so he could keep profiting from it at the expense of creditors and other stakeholders.
Dykstra is also accused of moving an oven, chandeliers and other lighting fixtures out of his estate and into storage after filing for bankruptcy.
Dykstra spent 12 years in the big leagues and helped the Mets to the World Series championship in 1986. He was a three-time All-Star in the 1990s while with the Phillies.