The Anchorman: The Legend of Ron Burgundy star, 72, was taken into custody on Wednesday night (18Jul12) after undercover vice officers allegedly caught him masturbating while watching a porn film at adult movie cinema Tiki Theater in Hollywood.
He was booked for the misdemeanour and released.
Willard's headline-grabbing bust has already had a negative affect on his career - PBS bosses have dropped the actor as the narrator of the network's Market Warriors reality show. The programme is a spin-off of the popular Antiques Roadshow.
A statement released by producers on Thursday (19Jul12) reads: "Given the unfortunate news reported today, effective immediately, Fred Willard no longer will be involved with the Market Warriors series."
Willard must appear in court at a later date to answer to the lewd conduct charge.
Meanwhile, the actor's lawyer, Paul Takakjian, has released a statement to TMZ.com, insisting his client is innocent.
He says, "With all due respect to the individual (arresting) officer, our belief is that Fred did nothing in any violation of any law. We will be working vigorously to clear his name in this matter."
Ironically, his arrest comes almost 21 years to the day that actor Paul Reubens, aka Pee Wee Herman, was booked for indecent exposure in July, 1991, after police officers allegedly caught him masturbating in an adult theatre in Sarasota, Florida.
Reubens released a statement denying the charges but later pleaded no contest, while maintaining his innocence, to avoid a trial.
He still maintains his arrest was the result of a misunderstanding.