Powell and Simpson are among five Jamaican athletes to have tested positive for taking banned substance oxilofrine at last month's national championships.
On Monday police raided a hotel room in Udine used by trainer Xuereb, confiscating supplements found there, and questioned him over the failed tests.
The substances are still undergoing analysis but police have said that the trio are being investigated for allegedly breaking Article 9 of Italy’s doping laws.
Earlier, a spokeswoman for Powell told the Guardian that the search warrant was arranged with their cooperation and that they contacted the World Anti-Doping Agency to guard against contamination of the supplements found.
Xuereb was questioned until 4.30am on Monday after the raid on the Fra i Pini hotel in Lignano Sabbiadoro.
Powell, who has never won an individual global sprint title, held the 100m world record between 2005 and 2008 when his then-best of 9.74 seconds was broken by current record holder and fellow-Jamaican Usain Bolt.
In a statement on Sunday, Powell said: "I will confirm that a sample I gave at the national trials in June earlier this year has returned 'adverse findings'. The substance oxilofrine (methylsynephrine) was found, which is considered by the authorities to be a banned stimulant.
"I want to be clear in saying to my family, friends and most of all my fans worldwide that I have never knowingly or wilfully taken any supplements or substances that break any rules.
"I am not now - nor have I ever been - a cheat.
"This result has left me completely devastated in many respects. Professionally, this finding fully negates any possibility of me being a part of Jamaica's contingent of athletes competing at (the) world championships in Moscow later this summer."
Powell’s camp added that Olympic 4x100m relay silver medallist Simpson, who was also shown to have taken oxilofrine, had also been given supplements by Xuereb after he started working with the duo on May 8.
Xuereb was recommended to them by a Canadian physiotherapist and worked with them on a trial basis for just one week prior to the Jamaican championships at which they failed the tests.
His contract, which saw him “treating Asafa and keeping him healthy” – according to Powell’s agent Paul Doyle - was then extended by four months.
Powell has withdrawn from the Diamond League event in Monaco on Friday.
Simpson, 28, was a member of the Jamaican team that finished second in the 4x100 relay at last year's London Olympics.
She finished equal second in the 100 metres at the 2008 Beijing Games and won a gold medal in the 4x100 relay four years earlier in Athens.
Also on Sunday, American former double sprint world champion Tyson Gay said he had tested positive for a substance he could not identify and was pulling out of next month's world championships in Moscow.
Gay, who had the year's fastest 100m time of 9.75 seconds, said in a telephone conference call to two reporters that he was notified by the US Anti-Doping Agency on Friday that his A sample from an out-of-competition test on May 16 had returned a positive.