"The government lost trust in her... Some security issues have been discovered," a spokeswoman for Svenska Kraftnat said, declining to give further details.
Lotta Medelius-Bredhe, a senior Finance Ministry official, was appointed as acting director general with immediate effect.
Sandborgh told Reuters that some of the allegations related to events that took place before she was appointed director general in 2017. She declined to elaborate or to say whether she would legally challenge her dismissal.
"I have ordered an investigation from the security police on what has been done. It is ongoing," she said.
She has worked for Svenska Kraftnat for nearly seven years, the last two as its top executive, her Linkedin profile shows.
The Swedish government was not immediately available for a comment.