CHARLESTON, W.Va.—Federal prosecutors launched an investigation Friday of a chemical spill that contaminated water supplies for several hundred thousand people and closed schools and businesses in the heart of the state.

Authorities don't know when the water will be safe for residents of the state capital and nine surrounding counties. A water ban went into effect Thursday after officials discovered that 4-methylcyclohexane methanol, used in coal processing, had leaked from a storage facility on the Elk River and seeped into...