The 59-year-old Duran Duran front man said allegations that he inappropriately touched Shereen Hariri were “completely untrue”.
In a statement, posted on Duran Duran’s official Facebook page but since deleted, Ms Hariri accused Le Bon of grabbing her “butt cheek” before “making his way down my butt to my genitals”.
Ms Hariri alleges the incident occurred at the record shop where she worked at the time – The Warehouse – while she was assisting Le Bon at the signing table and he was posing for photos.
She said she was left “shocked and completely frozen” and was “afraid of the consequences” of saying anything at the time.
She called the alleged attack “smug, so self-assured, so unbelievably brazen”.
She wrote: “If I made a scene, I’d be in the press: The ‘Girl Who Accused Simon Le Bon’. I’d probably be fired, rejected, ignored, even hated.”
She said she told her then-boyfriend, at least one supervisor and several co-workers what had happened at the time.
Ms Hariri, who was 24 when the alleged assault took place, now works as a therapist in Los Angeles, and says she wants “everyone to know what this man did to me”.
Referring to Le Bon’s wife Yasmin and his three daughters in her statement, she alluded to Donald Trump, writing: “I hope none of them are grabbed by the pussy by a powerful man just because he can.”
She said she had decided to open up about the alleged attack after first watching the 2016 video in which Mr Trump makes offensive remarks about women.
Ms Hariri concludes: “If he wants to make amends to me, I am open to it. But I am stopping the silence. #TimesUp.”
While she is not seeking compensation, she says she would like an apology.
In response, Le Bon posted a message on Duran Duran’s official Facebook page.
He wrote: “The behaviour that Ms Hariri has accused me of, would have been just as inappropriate and unacceptable to me then as it is today. But the allegation is simply untrue.
“When Ms Hariri first contacted me about her claim months ago, I proposed meeting with her in person so I could set the record straight. Instead, she has decided to pursue this publicly.
“I have always been one who can admit to my mistakes and apologise for my failings. But I cannot apologise for something I did not do.”
Le Bon’s publicist, Katy Krassner, said she had been with him throughout the “entire day” and that “what he is being accused of DID NOT happen”.
She added: “The idea that he sat there, right next to his band mates, in front of a bunch of cameras, reaching behind him to sexually assault someone that day is simply ludicrous.”
Hariri’s lawyer, Sarah Prescott, told the Detroit Free Press that her client had gone public with the story after Le Bon pulled out of a sit-down meeting with her.
Le Bon’s manager told Sky News: “We were not the ones to back out of a meeting.”