Morrison said the stories were completely untrue and "utterly without foundation."
The story first appeared on Morrison's website, citing an un-named spokesman who said that Morrison and Lee had fathered a child called George Ivan Morrison III.
The statement — which has since disappeared from the site — said the child had been born on Monday and was described as 'the spitting image of his daddy'.
The news was reported around the world and said that Morrison's "American manager," Gigi Lee had given birth to a baby boy.
However, Morrison, who spent Christmas in Belfast with his wife Michelle and his mother, said he is very happily married to Michelle Morrison.
Speaking on RTE today, a friend of Morrison's, John Saunders, said the singer was dismayed by the claims.
"Clearly it is upsetting for all their family and for all their friends," he told RTE Radio.
"I spoke to Van a short while ago and I said do you even know this person (Gigi Lee)?
"He's never heard the name at any stage in the past, he doesn't know who this person is."
Saunders said Morrison had waited so long to issue a statement in response because he was an intensely private person.
"I think he's within his right to feel that he shouldn't have to come out and comment on something that is completely false, but given the seriousness of this he has made this statement and he's emphatic that this story is completely and utterly without foundation."