The puppeteer has taken a leave of absence from Sesame Street following claims that he had a sexual relationship with a 16-year-old boy, reports TMZ.
A 23-year-old man is said to have recently met with Sesame Workshop lawyers, stating that he began a relationship with Clash seven years ago, when he was 16 and Clash was 45 years old.
Clash has stated that he had a relationship with the man in question, but has insisted it began after he became an adult.
Sesame Workshop sources said: "In June of this year, Sesame Workshop received a communication from a young man who alleged that he had a relationship with Kevin Clash beginning when he was 16 years old.
"This was a personal relationship, unrelated to the workplace. We took the allegation very seriously and took immediate action."
The accuser has now teamed up with lawyers Andreozzi and Associates, who represented one of the Jerry Sandusky child rape victims.
The firm has accused Sesame Workshop of attempting to "discredit the victim in order to protect its employee and the image of one of its most valuable characters", adding: "This approach places a greater value on a puppet than the well-being of a young man."
Sesame Workshop officials have stated that an investigation has been launched, and that the allegation of underage sex is "unsubstantiated", and that no evidence has been produced to prove otherwise.
They said: "Kevin insists that these allegations are false and defamatory and he has taken actions to protect his reputation. We have granted him a leave of absence to do so."
Clash told TMZ: "I had a relationship with [the accuser]. It was between two consenting adults and I am deeply saddened that he is trying to make it into something it was not."
Speaking about the character of Elmo, the workshop added: "Elmo is bigger than any one person and will continue to be an integral part of Sesame Street to engage, educate and inspire children around the world."
Watch a trailer from Kevin Clash's documentary Being Elmo below: