"They haven't seen a lot of my pictures, most of my career is R-rated," Douglas said of his children with wife Catherine Zeta-Jones during an interview on ABC's Popcorn with Peter Travers.
Douglas, 70, said that after Dylan gave him some advice on how to broaden his movie audience, he made the startling realization that his kids were more familiar with his work than he thought.
"Dylan came to me when I was reading the script and took it out of my hand and said, 'Dad, let me explain something to you: This is a whole new audience for you, Dad,' " Douglas said. " 'My friends will know who you are.' "
After the Oscar winner argued that his son wasn't well versed in his acclaimed career, Dylan retorted that he had, in fact, seen 1987's Fatal Attraction and 1992's Basic Instinct.
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"I said, 'You saw Basic Instinct?' and then he realized he was in a little bit of trouble," Douglas told Travers. "He goes, 'Well, I only looked at the parts with you, Dad, not Sharon Stone.' "
The R-rated thriller is especially memorable for one hair-raising, leg crossing scene.
Celebrate Michael Douglas' 70th with These Memorable Movie Moments
Douglas said that his relationship with wife Zeta-Jones, whom he split from briefly in 2013 after battling cancer, is "great."
"Life for me, I'm alive, I'm healthy Catherine and I are great, we're celebrating our 15th anniversary," he said during the interview.
The couple will celebrate their 15th anniversary in December.