An indictment unsealed in federal court in Manhattan said Epstein, 66, "intentionally sought out minors and knew that many of his victims were in fact under the age of 18, including because, in some instances, minor victims expressly told him their age."
The former hedge fund manager was accused of arranging for girls to perform nude "massages" and other sex acts, and paying some girls to recruit others.
Epstein has said in earlier court filings that his encounters with alleged victims were consensual and that he believed they were 18 when they occurred.
The indictment charged Epstein with one count of sex trafficking and one count of sex trafficking conspiracy for alleged misconduct from at least 2002 to 2005.
His lawyer, Jack Goldberger, said before the indictment was made public that Epstein will plead not guilty.
Known for socializing with politicians and royalty, Epstein once had friends including U.S. President Donald Trump and former president Bill Clinton, and according to court papers Britain's Prince Andrew.
None of those people were mentioned in the indictment.
The former hedge fund manager first came under investigation in 2005 after police in Palm Beach, Florida, received reports he had sexually abused underage girls in his mansion there.
By 2007, Epstein was facing a potential federal indictment for sexually abusing dozens of girls between 1999 and 2007, directing others to abuse them, and paying employees to bring victims to him, according to court filings.
However, Epstein struck a deal to plead guilty to a lesser Florida state felony prostitution charge. He served 13 months in a county jail, but was allowed to leave during the day to go to his office, and agreed to register as a sex offender.
Prosecutors involved in that agreement included Alex Acosta, then the U.S. Attorney for the Southern District of Florida and now Secretary of Labor for Trump.
A spokeswoman for the Department of Labor on Sunday declined to comment on Epstein's arrest.
Trump praised Epstein in an interview with New York magazine in 2002.
"I've known Jeff for fifteen years. Terrific guy," Trump said. "He's a lot of fun to be with. It is even said that he likes beautiful women as much as I do, and many of them are on the younger side. No doubt about it - Jeffrey enjoys his social life."
Epstein would initially recruit victims to provide "massages," which they would perform nude or partially nude, the indictment said.
Prosecutors said the encounters would become increasingly sexual in nature, sometimes including groping and indirect contact with victims' genitals, where Epstein would typically masturbate and ask victims to touch him while he did.
Epstein paid girls to recruit new girls, to ensure a "steady supply of new victims to exploit" prosecutors said.
Three unnamed employees, one in Manhattan and two in Palm Beach, aided Epstein by arranging some of his sexual encounters, the indictment said.
Several of Epstein's accusers had challenged his Florida deal in court, saying they were denied a chance to express their views, violating the federal Crime Victims' Rights Act.
In February of this year, a U.S. district judge in Florida agreed, saying the deal was illegal.
Even so, the U.S. Department of Justice said in a court filing last month there was no reason to cancel the agreement.
Democrats in the U.S. House of Representatives confronted Acosta about his role in April, during a hearing before a House subcommittee on a routine budget matter.
Acosta told lawmakers that human trafficking was "an incredibly important issue," and that his office's efforts ensured that Epstein would be punished.
"I understand the frustration," Acosta said. "It's important to understand that he was going to get off with no jail time or restitution. It was the work of our office that resulted in him going to jail."
The Justice Department is investigating whether government lawyers committed professional misconduct in the Florida case.