Sesame Workshop, which said it was first contacted by the accuser in June, had launched an investigation that included meeting with the accuser twice and meeting with Clash. Its investigation found the charge of underage conduct to be unsubstantiated.
Clash said on Monday he would take a break from Sesame Workshop "to deal with this false and defamatory allegation."
Elmo had previously been a marginal character on "Sesame Street," but Clash, supplying the fuzzy red puppet with a high-pitched voice and a carefree, child-like personality, launched the character into major stardom. Elmo soon rivaled Big Bird as the face of "Sesame Street."
Though usually behind the scenes, Clash achieved his own measure of fame. In 2006, he published an autobiography, "My Life as a Furry Red Monster," and he was the subject of the 2011 documentary "Being Elmo: A Puppeteer's Journey."
He has won 23 daytime Emmy awards and one prime-time Emmy.