Willard, 78, is best known for his work on the sitcom "Everybody Loves Raymond" and in writer-director Christopher Guest's mockumentaries "This is Spinal Tap," "Waiting for Guffman," "For Your Consideration," "Best in Show" and "A Mighty Wind." He is now host of the improv-comedy series "Trust Us with Your Life."
TMZ said Los Angeles Police Department undercover vice officers on a routine walk-through arrested Willard Wednesday night at the Tiki Theater after finding him watching a pornographic movie with his penis exposed and in his hand.
He was cited for lewd conduct and released from police custody the same night, TMZ said.
PBS announced it had fired him from its antique-hunting program "Market Warriors" hours after his arrest.
"Given the unfortunate news reported today, effective immediately Fred Willard will no longer be involved with the 'Market Warriors' series," Jeanne Hopkins of WGBH, the PBS station that produces the show, said in a statement to ABC News.
Mark Walberg, host of "Antiques Roadshow," will take over Willard's job, Hopkins said.
"It's something we felt was important to decide, and given the trust of our audiences, we wanted to move forward," Hopkins said.
"With all due respect to the individual officer, our belief is that Fred did nothing in any violation of any law. We will be working vigorously to clear his name in this matter," Willard's lawyer, Paul Takakjian, said in a statement to ABCNews.com.
Willard has been married to his wife Mary since 1972.