Geoffrey Rush has filed defamation proceedings against The Daily Telegraph, which published allegations the actor behaved inappropriately towards a female cast member in a Sydney Theatre Company (STC) play.
The Daily Telegraph editor Chris Dore said they would be defending the newspaper's reporting in court.
"This is to address the hyperbole, lies and the spurious claims about me in entertainment community".
"This has created irreparable damage to my reputation, which has been extremely hurtful to my wife, daughter and my son, as well as to my extended family and many colleagues in the film, television and theatre industries".
"This situation is intolerable and I must now seek vindication of my good name through the courts in Australia".
The newspaper said the allegations related to Rush's time playing King Lear for the company in 2015 and 2016.
Rush's solicitor, Nicholas Pullen, stated that the court documents had only been filed with the Federal Court of Australia earlier today, and that this press conference would likely be the first anyone at the Daily Telegraph would've heard of them.
The legal action comes just months after Hollywood actor Rebel Wilson won Aus$4.5 million (U.S.$3.4 million) - the largest defamation payout in Australian history - after successfully suing Bauer Media.
It comes after the Oscar victor stood down from his role as president of the Australian Academy of Cinema and Television Arts in light of the allegations.
Rush, who is best known for The King's Speech and the Pirates of the Caribbean franchise, fronted media on Friday afternoon with his lawyer to make the announcement.
A company spokesperson said the complainant requested the allegation be dealt with confidentially, and did not want Rush notified or involved in any investigation.
"Your "understanding" of what has occurred is, with the greatest respect, simply fishing and unfounded".
Rush also won an Emmy, a BAFTA and a Golden Globe for the role.