Monsignor Tommaso Stenico has told the Associated Press that he is the Vatican official suspended after an elaborate sting conducted by a private Italian television network to expose gay priests.
The network hired a man to contact a handful of priests on the Internet and then secretly film their meetings.
Stenico was anonymous, but was reportedly identified by his voice and the appearance of his office in the background.
In one conversation, the priest identified as Stenico is reportedly heard on camera saying he doesn't believe homosexual sex is a sin.
There are no allegations that sex took place.
In an interview with the Rome daily La Repubblica, Stenico said he was only pretending to be gay as part of his work as a psychotherapist.
"It's all false. It was a trap," Stenico said. "I was a victim of my own attempts to contribute to cleaning up the church with my psychoanalyst work."
The Vatican moved quickly to suspend Stenico while it conducts its investigation. A Vatican spokesman said the case is being handled "with the utmost reserve."
Homosexual tendencies are not considered a sin in the Catholic Church, though homosexual sex is.
Homosexuality in the priesthood has not been a big issue in Europe, but Vatican reporter Marco Politi said that may be changing.
"Until now, the church has had to deal with this abroad, " he said. "Now, they have to face it inside Italy."
Jim Sciutto and Hanna Siegel contributed to this report.