The allegations came to the fore following Gayle's widely-criticised live interview with Ten Sports' female presenter Mel McLaughlin while playing for Melbourne Renegades in the Big Bash League.
The Renegades slapped a fine of USD 10,000 for making controversial remarks to McLaughlin, who found herself being asked out for a drink after Gayle blasted 41 runs off 15 balls on Monday.
"Chris Gayle has strongly denied allegations first published by Fairfax Media that he indecently exposed himself to a woman during last year's World Cup in Sydney," Gayle's manager Simon Auteri said in a statement.
"Despite such denials Fairfax Media continues to publish the false and defamatory allegations which have received widespread re-publication in media throughout the world.
More From This Section
"As a result Chris Gayle has retained Mark O'Brien, a leading Australian media lawyer to immediately commence defamation proceedings against Fairfax Media."
Gayle apologised and tried to brush off the exchange with McLaughlin as a harmless joke, but Fox Sports reporter Neroli Meadows branded the Jamaican a "creep".