Semtex from Libya became the IRA's most devastating and infamous weapon during the Troubles.
The NI Affairs Committee will look at how effective government efforts have been in seeking redress for victims.
It will also examine potential options for compensation, such as using the frozen assets of the Gaddafi family.
Links between the IRA and Libya can be traced back to 1972 when the country's leader Colonel Muammar Gaddafi first praised the group as allies in a struggle against Western imperialism.
Gaddafi later helped provide the IRA with the weaponry they needed to wage an armed campaign that lasted more than 30 years and claimed more than 1,000 lives.
He was toppled from power in August 2011 after 42 years in charge of the country. Two months later he was killed after an assault on his birthplace of Sirte.
The committee has invited written evidence from interested parties.
An inquiry is to begin at Westminster on Wednesday into the issue of compensation for victims of Libyan-sponsored IRA violence.