Derek Harvey, a National Security Council official brought in by Flynn, continued work on the proposal, which has remained under consideration by the Trump administration.
Elijah Cummings, Democrat chairman of the House Oversight and Reform Committee, announced the investigation Tuesday.
The committee’s report details how National Security Council and ethics officials repeatedly warned that the actions of Flynn and a senior aide could run afoul of federal conflicts of interest law, and statutes governing the transfer of nuclear technology to foreign powers.
Congressional investigators are also probing the role of Tom Barrack, a proponent of the nuclear proposal who ran Mr Trump’s presidential inaugural committee.
A spokesman for Mr Barrack said in a statement that he will cooperate with the House probe.
According to the report, the whistleblowers came to the committee because they had concerns “about efforts inside the White House to rush the transfer of highly sensitive US nuclear technology to Saudi Arabia in potential violation of the Atomic Energy Act and without review by Congress as required by law – efforts that may be ongoing to this day.”
The nuclear proposal is known as the “Marshall Plan for the Middle East”.
According to the report, H R McMaster, who replaced Flynn as national security adviser, directed that work stop on the proposal because of concerns about its legality, but it continued.