The 50-year-old, who has a troubled history with drugs, alcohol and prostitutes, said he paid out "enough to bring into the millions" to keep the illness a secret.
"I am here to admit that I am in fact HIV positive," Sheen said in interview with NBC's Today show.
"It's a hard three letters to absorb. It's a turning point in one's life," said the actor, adding he found out about his status "roughly four years ago."
He said he had confided to some of those he's had sexual contact with but then they started extorting him.
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"What people forget is that it's money taken from my children," he said about the "shakedowns".
"I trusted them and they were deep in my inner circle, and I thought they could be helpful. My trust turned to their treason... I think I release myself from this prison today."
Once the highest paid TV actor, Sheen was fired from "Two and a Half" men in 2011 following an epic meltdown where he called the show's producer "a contaminated little maggot".
Sheen has two children each with former wives, Denise Richards and Brooke Mueller. His first wife is Donna Peele whom he married in the 1990s.
The actor's doctor claimed that Sheen did not have AIDS.