The actor – who recently confirmed his HIV-positive status – has allegedly recorded an adult movie with a male lover, allegedly smoking crack in the footage.
Sheen is reportedly worried that the video could be made public, and has paid out £6.6million in a desperate attempt to keep up to eight sex tapes private, it has been claimed.
It is alleged that in one of the videos, Sheen performs a sex act on a man, before grinning into the camera's lens.
Speaking of the sex tapes, a source said: "It makes you wonder what went through Charlie’s mind to let himself be filmed.
"He is desperate to keep the videos off the internet but they have already been leaked.
"The clips last about 30 seconds and show him smoking a crack cocaine pipe and with a male lover."
The Two and a Half Men star, 50, is said to be fighting to keep the footage off the internet, but details of what the tape depicts are expected to be released.
Charlie is already facing tons of legal claims from former partners, after admitting he is HIV-positive.
America's National Enquirer magazine – which broke the story after an 18-month long probe – is thought to have seen up to five tapes, which allegedly show the actor with both men and women, as well as smoking drugs.
The reports come a week after Sheen admitted he'd paid up to £6million to numerous people, in a bid to stop them revealing his HIV status.
Charlie mentioned no names, but spoke about those who blackmailed him, saying: "I trusted them, they were deep in my inner circle, I thought they could be helpful, but my trust turned to their treason. We're talking about shakedowns."
He said he always told his partners about his HIV-positive status, but his former girlfriend and ex-porn star Bree Olsen, 29, has come forward to rubbish this claim.
Sheen once had an estimated fortune of £66million, but says he lost a lot of that to pay outs.
