The Dominican Attorney General later announced that a special prosecutor had been appointed to investigate Archbishop Josef Wesolowski, who has been nuncio, or ambassador, in the capital Santo Domingo for nearly six years.
Vatican spokesman Father Federico Lombardi said the Holy See had started a probe of Wesolowski and that he had been recalled "in the last few weeks," specifically over the pedophilia accusations.
"He has been relieved of his duties and the Holy See has begun an investigation," Lombardi said when asked about allegations against Wesolowski in the local media.
Wesolowski could not be reached for comment.
Weeks after his election in March as the first non-European pontiff in 1,300 years, Pope Francis announced he wanted the church to root out sexual abuse of children by priests and ensure that abusers are punished.
He said Wesolowski faces possible punishment by the Vatican but may be immune from prosecution in the Dominican Republic because a nuncio has diplomatic status.
Dominican Attorney General Francisco Domínguez Brito told reporters the investigation would take into account national and international law, "given his status as a diplomat."
The prosecutor for the Santo Domingo district, Yeni Berenice Reynoso, said the probe was triggered by accusations broadcast on Monday by two local TV channels.
She said Wesolowski "must be investigated and punished in the (Dominican Republic) and not in the Holy See."
Wesolowski's whereabouts are unknown. Local media reports say he left the country in early August.
He is the second Polish priest in the Dominican Republic to be accused of child sex abuse this year.
Dominican authorities are also investigating Wojciech Gil, who was suspended by his religious order in the rural parish of Juncalito in May after local residents accused him of molesting altar boys, according to the church.
Gil was on vacation in Poland when he was suspended, the church said. It is not known if he returned to the Dominican Republic. He could not be reached for comment.