The veteran musician made the claim in an interview with American Parade magazine.
Sir Elton said the son of God "understood human problems" and went on to lament human cruelty.
"On the cross, he forgave the people who crucified him," he added.
"Jesus wanted us to be loving and forgiving. I don't know what makes people so cruel.
"Try being a gay woman in the Middle East - you're as good as dead."
America's powerful religious lobby will surely not be happy with the comments.
I think Jesus was a compassionate, super-intelligent gay man who understood human problems.
Sir Elton speaks to Parade magazine
After John Lennon told London's Evening Standard: "We're more popular than Jesus now," Beatles records were burnt and some radio stations stopped playing their songs.
Sir Elton is no stranger to controversy - himself feeling the heat from unhappy fans.
"Every time I sing The Ballad Of The Boy In The Red Shoes onstage, I say that this is a song written about a time when people in America started getting Aids and your president, Ronald Reagan, did nothing about it - I get boos," he said.
"There's a lot of hate in the world."
Sir Elton also spoke about past relationship and his now long-time partner, David Furnish.
"Every Saturday for 16 years, we've sent each other a card, no matter where we are in the world, to say how much we love each other," he said.
