TMZ broke the story ... Clash is being sued by Cecil Singleton, who claims he met Kevin in a gay phone chat back in '93 ... when he was 15 and Clash was 32.
Sesame Workshop says, "Unfortunately, the controversy surrounding Kevin’s personal life has become a distraction that none of us want, and he has concluded that he can no longer be effective in his job and has resigned from Sesame Street. This is a sad day for Sesame Street."
Sesame Workshop had previously told TMZ, "Elmo is bigger than any one person." That was in response to the initial underage sex accusation from Sheldon Stephens.
As TMZ previously reported ... Stephens signed a $125,000 settlement with Clash, but has since expressed regret over signing the deal which required him to recant his claim.