The 47-year-old actor gave his 'Scary Movie 5' co-star $100,000 after she allegedly didn't receive all the money she was supposed to be paid for her part in the film, but he regrets giving her so much after she used it to help pay her hefty $233,904 tax bill.
Speaking on 'The Tonight Show with Jay Leno', he said: "They offered me a decent amount of cash to do 'Scary Five' as a cameo.
"Then they said they're going to hire Lindsay. I thought fabulous.
"They took half my money to give to her and she didn't get it all. And when I found this out I said, 'You got shorted a hundred grand' so I gave it to her.
"I didn't know it was for taxes. If I'd have known that I'd have given her half."
But Charlie believes Lindsay - who narrowly escaped a warrant being issued for her arrest earlier this week - is "smart and super fabulous", and he is confident she will overcome her latest troubles.
He added: "She's terrific, I mean she's going through a lot of stuff.
"She's smart and super fabulous and I think will come out on top eventually, you know."
But Charlie does not hold disgraced cyclist Lance Armstrong in such high regard, and insists he was "kind of a douche" to him when they met at a party in 2005.
He said: "He was talking to, I think he was talking to Sheryl Crow at the time. I said, 'Hi Mr. Armstrong, I'm Charlie Sheen. I just wanna say hello.'
"He looks at me, he's like, 'That's nice.'
"If he was a better guy I think in his life he'd be forgiven a lot faster and a lot easier. Kind of like me."