The puppeteer, 52, who is the voice of Elmo on Sesame Street, was granted a leave of absence from the long-running program amid an accusation from an unidentified male that Clash was having sex with him at age 16.
On Tuesday the law firm that represents the accuser released a statement to the Los Angeles Times, recanting the claim.
The accuser "wants it to be known that his sexual relationship with Mr. Clash was an adult consensual relationship," the statement from Andreozzi & Associates says. "He will have no further comment on the matter."
Clash admitted to having a consensual relationship with the male, who he says is now 23, but stated that the man was not a minor at the time they initially got together.
"I am relieved that this painful allegation has been put to rest," Clash told PEOPLE in a statement through his rep. "I will not discuss it further."
Clash's show is equally happy with the outcome.
"We are pleased that this matter has been brought to aclose," Sesame Workshop said in a statement to PEOPLE on Tuesday. "We are happy that Kevin can move on from this unfortunate episode."
Reporting By CHARLOTTE TRIGGS