The pop star's publicist said Jackson, who arrived in Dubai this week as the guest of a champion rally driver, did not understand the Arabic sign on the door and left the bathroom as soon as he realized his mistake.
In the statement released late Tuesday, Jackson's publicist, Raymond K. Bain said: "Upon his exit (from the ladies bathroom), he was recognized and a crowd ensued. He had to wait in a nearby bookstore until police arrived to escort him through the crowd."
But local newspapers reported that the 47-year-old performer did not quickly leave the bathroom and was spotted applying makeup before leaving.
Jackson's host, the Emirates champion rally driver Mohammed bin Sulayem, dismissed the story as rumor.
"People are always interested in gossip and in portraying a negative image of (Jackson)," bin Sulayem told The Associated Press on Tuesday. "The reality is that he's an easy person to be with, not demanding and not difficult."
Bin Sulayem said Jackson was considering buying property in Dubai. This week's visit is his second after a stay in August.
"He likes the place and we want him to stay for good here. He likes what he saw and we should try to convince him to buy," he said.
Though it has been reported that Jackson has purchased acreage on Bahrain's Amwaj Islands, his publicist has denied it.
Since his June acquittal on child molestation charges, Jackson has made several trips to Bahrain as a guest of Sheik Abdullah bin Hamad Al Khalifa, the son of Bahrain's king.