Dylan Farrow, 28, posted a detailed letter on the New York Times website during the weekend, accusing Allen of sexually abusing her when she was a child.
Allen adopted Dylan with his former girlfriend, actress Mia Farrow, but their relationship ended in 1992 when Allen was caught having an affair with Mia's adopted teenage daughter, Soon-Yi Previn, whom Allen married in 1997.
The allegations Allen sexually assaulted Dylan were first made when he and Mia broke up, but an investigation determined the claims were unfounded and Allen never was charged with any crime.
"His reaction is one of overwhelming sadness because of what has happened to Dylan," Allen's lawyer, Elkan Abramowitz, said on the "Today" show when asked about how the 78-year-old auteur reacted to Farrow's letter.
"[Dylan] was a pawn in a huge fight between him and Mia Farrow years ago, and the idea that she was molested was implanted in her by her mother," Abramowitz said. "That memory is never going to go away. So the fact that she says this now, that it happened 20 years ago, is totally understandable. ... In my view, she's not lying. I think she truly believes this happened. That's what the vice of this is. When you implant a story in a fragile 7-year-old's mind, it stays there forever. It never goes away."
The attorney said he believes the allegations are being revived because Allen has been earning career achievement accolades and his latest film "Blue Jasmine" is up for three Oscars.
Mia Farrow weighed in on the controversy via Twitter Tuesday.
"I love my daughter," she tweeted. "I will always protect her. A lot of ugliness is going to be aimed at me. But this is not about me, it's about her truth."
Susan Sarandon 'very excited' about daughter's pregnancy
Scarlett Johansson steps out with fiance after pregnancy reveal