"Jay thinks this is going to make him hip," Stern railed on his first day back on the air after learning that Leno hired Melendez to be his new announcer and correspondent starting next month.
Stern has frequently accused Leno of swiping bits from his top-rated radio show, including his stripper and homeless-person quizzes and wacky celebrity interviews - a "Stuttering John" (search) trademark.
"How much more material are you going to take from me?" Stern said. "You make $14 million a year and Letterman makes $31 million. Why don't you ask NBC for the 31 and pay me the rest since I'm writing material for you now?
"You wanted a guy associated with my show [because] you can't get 18 to 25-year-old men," Stern said. "To an 18- to 25-year-old male, Jay Leno is gay. He might as well put a dress on."
Leno called Stern twice to discuss Melendez, according to the shock jock, and even asked Stern to appear on the "Tonight Show" (search) to discuss his gripes - an offer Stern rejected.
"I told him everyone in the business is talking about how transparent and lame and gay you are and that you can't even develop your own people," Stern said. "I said this move is as bizarre to me as when you hid in the closet and spied on the NBC executives."
Stern said he loves Melendez, who will reportedly make $1.5 million over three years. and warned Leno not to abandon him when the ratings don't go up.
"Ask David Letterman how loyal Jay is," Stern told Melendez, who kept a low profile during Stern's rant, except to volunteer that maybe Leno's motives are pure.
"Can't they just like me?" Melendez said.
Leno declined comment through a "Tonight Show" spokesperson.
Stern said surprisingly little yesterday about the "zero tolerance" indecency policy announced by his Infinity bosses when he was on vacation last week.