China's State Administration of Religious Affairs issued a statement Thursday saying it was "highly concerned" and had launched an investigation.
The report also made the pages of China's state-run Global Times newspaper.
The allegations say that Xuecheng sent explicit text messages to at least six nuns and persuaded four of them to have sex with him. One of the nuns told police last month that she was among "many nuns" sexually assaulted by their spiritual leader, the report says.
"He uses text messages to tease and induce the sexual desire of the female disciples, make them depend on him and then control them," it added.
The report accused Xuecheng of "borrowing" tactics from "cult organizations," including "mind control … to bring out the sexual desire which was originally restrained by morals or discipline." It said he also separated women from their family and friends and restricted their phone and internet access.
As well as his role as the head of the Buddhist Association of China, Xuecheng is a member of the National Political Consultative Conference, a government body that advises on major decisions.
The Longquan Temple where he is based was founded more than 1,000 years ago and has earned a reputation as a center for new technology. It reopened in 2005 decked out with fingerprint scanners, webcams and iPads for studying sutras.
Its most famous invention is the Robot Monk, which can follow instructions, read scriptures and play Buddhist music.
Xuecheng has earned a reputation as the modern founder of this tech temple, and the chief proponent of using modern technology to teach Buddhism.
Dawn Liu and Eric Baulinao reported from Beijing, and Alexander Smith from London.