The governor of Alaska's Yahoo e-mail account was accessed by a hacker who was able to reset her password by guessing personal information.
The culprit guessed that Alaska's governor had met her husband in high school, and knew Ms Palin's date of birth and home Zip code.
Using the details, the hacker used Yahoo Inc.'s service to assign a new password, 'popcorn,' for Ms Palin's e-mail account (gov.sarah@yahoo.com), according to a chronology of the crime published on the website where the hacking was first revealed(Click here to see Sarah Palin's e-mails).
The FBI and Secret Service launched a formal investigation on Wednesday. Yahoo declined to comment on details of the investigation yesterday, citing Ms Palin's privacy and the sensitivity of such investigations.
The break-in of Ms Palin's private account is especially significant because she has previously used non-government e-mail to conduct state business.
E-mails already disclosed indicate the govenor's administration used Yahoo accounts as an alternative to government e-mail, which could be released to the public under Alaska's Open Records Act.
At the time, critics of Ms Palin's administration were examining official e-mails they had obtained from her office looking for evidence of improper political activity.
The person who claimed responsibility for the break-in declined to comment.
The McCain campaign issued a statement describing the hacking as an invasion of Govenor Palin's privacy.
Meanwhile, Ms Palin's husband is refusing to comply with a subpoena issued in an abuse-of-power probe into her, the family's lawyer said yesterday.
Todd Palin, father of five children with John McCain's running mate, was among 13 people ordered to testify in the potentially explosive 'Troopergate' investigation into the Alaska governor.
The probe is being overseen by the head of the Alaska state Senate judiciary committee, who is a Democrat.
The subpoena rejection throws into question whether the probe's final report, due 10 October, could now be completed before Americans go to the polls on 4 November.
The investigation is seeking to address whether Ms Palin improperly dismissed the state's public safety commissioner because he refused to fire a state trooper, Mike Wooten, who is her former brother-in-law.
Ms Palin maintains that she fired the commissioner because of policy differences and not because of his refusal to fire the trooper.
