Conservative Cllr Mick Green is facing allegations over two separate incidents against children in 2006 and 2011 in the Glenrothes and Leslie areas, according to police.
Elected in 2017, the 70-year-old represents the Glenrothes North, Leslie and Markinch ward on Fife Council.
The Conservative Party confirmed Mr Green has since been suspended from the party following news of his arrest.
A spokesman said: “Councillor Mick Green was suspended when we became aware of a police investigation that resulted in charges being made.”
A police spokesman said: “A 70-year-old man has been arrested and charged with two separate incidents of non-recent sexual offences against children that took place in 2006 and 2011 in the Glenrothes and Leslie areas.
“He has been released on an undertaking to appear at court at a later date.
“A report will be submitted to the Procurator Fiscal.”