The indictment cites a "money trail" relating to Mr Cheney's financial stake in prison-related businesses, including the Vanguard Group, which has an interest in privately-run federal jails in the region.
According to a grand jury in Willacy County, Mr Cheney is "is "profiteering from depriving human beings of their liberty".
It also accuses him of a conflict of interest and of "at least misdemeanour assaults" on inmates because of his links to the prison companies.
Mr Gonzales is accused of using his position to "stop the investigations as to the wrong doings" in county prisons.
The grand jury wrote that it made its decision "with great sadness" but said it had no other choice but to indict the pair "because we love our country".
The indictment – which is being overseen by Juan Guerra, the local district attorney – has not been seen by a judge, who could dismiss it.
Juan Guerra has a history of launching eccentric court and political battles, and critics accused him of trying to settle old scores in his final weeks in office.
However, he insisted the decision to bring charges was made by the grand jury not by him.
He said the prison-related charges against the pair were a national issue and experts from across the US testified to the grand jury.
Willacy County has become a hub for prisons. Last month, a grand jury indicted the GEO Group, a Florida private prison company, for murder over the death of a Willacy County prisoner just days before his release.
The company stands accused of allowing other inmates to beat Gregorio de la Rosa to death with padlocks stuffed into socks.
In 2006, a jury ordered the company to pay de la Rosa's family $47.5 million in a civil judgment. The Cheney-Gonzales indictment makes reference to the de la Rosa case.
Mr Cheney's office said it could not comment until it had received an indictment.
George Terwilliger, Mr Gonzales' lawyer, said in a written statement: "This is obviously a bogus charge on its face, as any good prosecutor can recognise."
He said he hoped Texas authorities would take steps to stop "this abuse of the criminal justice system".
It is not the first time that the vice president's business interests have provoked controversy.
His relationship with Halliburton, the energy company of which he was once chief executive, was scrutinised after one of its subsidiaries won contracts worth more than $1.7 billion to repair Iraq's oil industry.