The Vatican said Friday that US officials complained in August "of a possible violation of laws relating to child pornography images by a member of the diplomatic corps of the Holy See."
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In Washington, a State Department official confirmed to AFP that the diplomat in question had been allowed to leave the United States because he enjoys immunity from criminal prosecution.
"The United States formally requested that the Nunciature waive diplomatic immunity for the individual, but the Nunciature declined to do so," the official said, on condition of anonymity.
Neither the church nor US officials named the priest -- one of four assigned to the Apostolic Nunciature, the Vatican embassy in Washington -- but the Vatican said an investigation is underway.
The Vatican press service said "efforts had been made through international collaboration to obtain elements relative to the case," suggesting that Rome is seeking evidence from US officials.
But with the investigation at a preliminary stage, the case is subject to confidentiality, the Vatican said.
The State Department referred questions about the investigation to the Vatican, and US officials made it clear that they expect church authorities to take the matter seriously.
"The United States condemns the abuse and exploitation of children wherever it exists, and we offer sincere condolences to victims," the official said.
The official noted that Pope Francis has vowed to "act decisively with regard to cases of sexual abuse" -- after decades of scandals that have dogged the Catholic Church around the globe.
"The United States encourages the Holy See to ensure full implementation of its reforms and policies designed to protect minors and provide justice regarding allegations," he said.
"We would refer you to Vatican officials on the current state of those efforts."
The withdrawal of the Washington priest is not the first time that a Vatican diplomat has been caught up in such a scandal -- and the last case was particularly embarrassing for the church.
In 2013, Polish priest Jozef Wesolowski was recalled as the papal nuncio or ambassador from the Dominican Republic, after press reports that he had paid for sexual encounters with children.
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The Vatican refused to extradite Wesolowksi to Poland to face trial, but an ecclesiastical court found him guilty and he was defrocked -- the maximum penalty then available.
But Pope Francis, whose elevation in March 2013 raised hopes for church reform, ordered that Wesolowski face criminal charges for child abuse, a first in Vatican history.
The accused was held under house arrest but he died in August 2015, aged 67, on the eve of his trial.
He had been charged with sexual assault on children aged 13 to 16 and with possession of a large quantity of child pornography, downloaded from the internet after his return to Rome.
He faced up to seven years in jail if convicted.
Details of the latest case involving the Washington-based priest remain confidential, but Vatican authorities have passed the case to "the Promoter of Justice of the Vatican Tribunal."
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