Bárcenas, the treasurer of the PP from 1990 to 2009, had failed to adequately explain the around €47 million ($61.5 million) that he held in Swiss bank accounts, said presiding High Court judge Pablo Ruz in his ruling.
In a 24-page court order, the judge remanded the former top official in custody because he presented an increased flight risk and that he might destroy evidence.
The decision to send the Bárcenas to prison is the latest development in the long-running corruption case known as 'Caso Gürtel.
In that case, the ex-treasurer is charged with money laundering and tax fraud among other crimes as part of an investigation into a group of Spanish businessmen who organized PP events in exchange for kickbacks.
The move to remain the ex-treasurer in custody comes in the wake of recent revelations that Bárcenas held more money in Swiss accounts than was originally suspected.
Links to accounts in the United States and Uruguay are also being investigated.
Judge Ruz also said in his court order that Bárcenas had forged documentation and "simulated" deals involving works of art to hide the money trail.
The PP issued a statement a 17-word statement on Thursday saying it respected the court's decision "as always", Spanish national daily El País reported.
The ex-treasurer's lawyer, Alfonso Trallero, meanwhile, said in Spain's High Court "You can't say that having €25, €30 or €40 million in Switzerland is a crime."
The lawyer also dismissed the idea that his client was a flight risk.
"It's impossible that Mr Bárcenas could flee and destroy evidence," Trallero was quoted as saying in ABC newspaper.
"He is one of the best known people (around) and has an appearance that would make him recognizable wherever he goes in the world."
In a second case against Bárcenas, the official is also accused of managing an illegal slush for the PP.
El País in January published account ledgers purportedly showing that Mariano Rajoy, now prime minister, and other party leaders received tens of thousands of euros in undeclared payments channelled from donors.
The affair rattled the party and fuelled public outrage as Rajoy pushes through economic reforms to stabilize Spain's crisis-hit public finances.