The three-minute-long clip alleges Finn, 67, has become a father again, which is not true.
He has only two sons, Liam, 41, and Elroy, 35.
Dr Lance O’Sullivan, a former New Zealander of the Year, also appears in the video to deliver a speech about the “pharmaceutical mafia”.
“This might be the most important decision of your life,” the AI-generated O’Sullivan claims.
In a statement to their Facebook page, the band shared the video to humorously deny the claims about Finn’s sexual performance.
“We’re not sure where this came from but please don’t be fooled. Neil’s never had trouble with erections.”
Finn is a founding member of Crowded House, which formed in 1985 after the “split” of Split Enz.
Known for tracks Don’t Dream It’s Over, Fall At Your Feet, and Weather With You, the group have sold more than 15 million albums worldwide.
They will be touring Australia this year but have no current plans for more shows on New Zealand shores.
