Kelvin Hopkins, who was suspended last week, was rebuked by the party's then chief whip and Doncaster Central MP Rosie Winterton in 2015 after a young, female activist raised concerns.
Now Mr Corbyn has said he was aware of the the reprimand but said he thought the case had been "closed" and the promotion to his ministerial team had been "reasonable."
76-year old Mr Hopkins, who denies sexual harassment, has been accused by Ava Etemadzadeh of hugging her inappropriately after a student event in 2014 and subsequently making offensive comments during a visit to Parliament.
She did not make a formal complaint at the time after being told she would have to waive her anonymity to do so.
But then chief whip Rosie Winterton was responsible for reprimanding Mr Hopkins in 2015.
Labour's handling of the case has come in for criticism after it emerged that Ms Winterton expressed her reservations to the leadership about Mr Hopkins' appointment as shadow culture secretary in July 2016.
Although he only served in the position for three months, at a time when Mr Corbyn was struggling to rebuild his frontbench after a mass walkout over his leadership, several MPs have suggested the move was a mistake.
Asked whether it was appropriate to promote Mr Hopkins, Mr Corbyn said he could not "discuss hindsight" but he stood by his decision at the time.
"He had been reprimanded, the case had been closed... I thought it was reasonable to appoint him, albeit for a very short time, to shadow cabinet... All I can say is I took a decision based on what I knew at the time and he made a good contribution to the shadow cabinet during the short time he was there."
The whole matter must now be "investigated and resolved," Mr Corbyn insisted.
"Now the case has been reopened and it will be looked at again. He has been suspended from party membership, which is the decision I took immediately I heard about the later revelations."