Zafar, took to Twitter and said he will take this matter through the courts of law and he would not like to "contest vendetta on social media".
"I categorically deny all and any claims of harassment lodged against me by Ms Shafi. I intend to take this through the courts of law and to address this professionally and seriously rather than to lodge any allegations here, contesting personal vendettas on social media and in turn disrespecting the movement, my family, the industry and my fans," he wrote.
While concluding his statement, Zafar stated that he is a firm believer that truth trumps all.
Zafar also claimed that he is aware of the #MeToo movement that has encouraged women from all over the world to share their stories.
"I am deeply aware in support of the #MeToo movement and what it stands for. I am the father of the young girl and a young boy and a son of a mother. I am a man that has stood up for myself, my family, my colleagues, and friends countless times in the face of slander, defamation and general unkindness. I will do the same today. I have nothing to hide. Silence is absolutely not an option," he said.
Earlier in the day, in a social media post, the 36-year-old Shafi said Zafar harassed her on multiple occasions and that "my conscience does not allow me to be silent anymore."
Ali Zafar accused of sexual harassment by Pakistani singer Meesha Shafi
"Sharing this because I believe that by speaking out about my own experience of sexual harassment, I will break the culture of silence that permeates through our society. It is not easy to speak out.. but it is harder to stay silent. My conscience will not allow it anymore #MeToo," tweeted Shafi, who has also featured in Bhaag Milkha Bhaag.
She added, "I have been subjected, on more than one occasion, to sexual harassment of a physical nature at the hands of a colleague from my industry: Ali Zafar. These incidences did not happen when I was young, or just entering the industry. This happened to me despite the fact that I am an empowered, accomplished woman who is known for speaking her mind! This happened to me as a mother of two children."
"It has been an extremely traumatic experience for me and my family. Ali is someone I have known for many years and someone who I have shared the stage with. I feel betrayed by his behaviour and his attitude and I know that I am not alone."
"Today I am breaking this culture of silence and I hope that by doing that I am setting an example for young women in my country to do the same. We only have our voices and the time has come to use them," she concluded.
Reportedly, it is for the first time a Pakistani celebrity has leveled allegations of sexual harassment against a colleague and it has come amid ongoing 'Me Too' hashtag movement, which has spreading everywhere after many celebrities in the West spoke up against sexual harassment and called out their harassers in October and a few months thereafter.