The man had accused Kevin Clash of having an inappropriate relationship with him when he was just a teen, but on Tuesday, the 23-year-old man said in a statement that the sexual relationship was adult and consensual.
The man had no further comment on the matter. He issued the statement through the law firm of Andreozzi & Associates.
In response, Clash issued a statement, saying he was "relieved that this painful allegation has been put to rest."
Sesame Workshop had stated earlier that its investigation found the allegation of underage conduct to be unsubstantiated.
Clash, the divorced father of a grown daughter, has been a puppeteer for "Sesame Street" since 1984.
The Associated Press contributed to this report.