Jeffrey Toobin, 60, also a prominent CNN commentator, has been in demand as the US election campaign intensifies.
The incident, first reported by Vice News, happened during an election simulation involving the New Yorker and WNYC radio last week.
Mr Toobin, in a statement to Vice, said: "I made an embarrassingly stupid mistake, believing I was off-camera."
He apologised to his family, friends and colleagues.
"I believed I was not visible on Zoom," he told Vice. "I thought no-one on the Zoom call could see me. I thought I had muted the Zoom video."
Vice quotes two anonymous sources who were at the meeting as saying they witnessed the incident. The election simulation involved prominent New York figures playing politicians, such as President Donald Trump and Democratic contender Joe Biden. Mr Toobin was representing the courts.
During a break in proceedings, according to Vice's sources, Mr Toobin appeared to be on a different Zoom call but was seen moments later on camera touching his penis.
"Jeffrey Toobin has been suspended while we investigate the matter," the New Yorker said.
He is also CNN's chief legal analyst. The news network said: "Jeff Toobin has asked for some time off while he deals with a personal issue, which we have granted."
Mr Toobin is the author of several books. The latest, published in August, is True Crimes and Misdemeanors: The Investigation of Donald Trump - about the Mueller inquiry into allegations of collusion between Russia and the 2016 Trump campaign.