According to TMZ, Jeff Kwatinetz filed documents in LA County Superior Court on Monday accusing Kelly of failing to pay him the 15% commission rate agreed upon in their business arrangement.
Kwatinetz claimed that he "guided Kelly through the recording of two new albums, substantial multi-million dollar tours... a book deal, and a myriad of other appearances and events" in 2008 during the period in which Kelly was facing multiple child pornography charges.
He also alleged that he was not paid for his work because "the monies were needed for payments to avoid lawsuits and adverse publicity resulting from Kelly's alleged [sexual misconduct]."
Kwatinetz is asking for $1 million (£615,800) in damages and unpaid commissions.
However, a spokesperson for Kelly has slammed the suit, telling the website in a statement: "Jeff Kwatinetz's complaint is a collection of half-truths, distortions, and outright fabrications.
"Mr. Kwatinetz is a disgruntled former manager who apparently feels the need to try to seek retribution for his discharge. It is particularly disturbing, given his job as a professional talent manager and trusted adviser, that he would feel the need to lash out and dish what he thinks is dirt against a former client."
R Kelly was named Billboard's best-selling R&B artist of the past 25 years in November 2010.