YouTube executives were aware that copyrighted videos were being uploaded to the service from the start, according to internal evidence unsealed by a US court.
The evidence could undermine YouTube's defence against a $1bn copyright infringement case brought by film studio and TV network owner, Viacom, according to the Financial Times.
Internal investigations reveal that that not only were YouTube executives aware copyrighted videos were being uploaded, but also that a co-founder was guilty of the practice.
Within five months of YouTube's launch in 2005, co-founder Steve Chen wrote in an e-mail to fellow co-founders Jawed Karim and Chad Hurley, "Jawed, please stop putting stolen videos on the site."
According to analysts, the evidence could mark a watershed in YouTube's attempts to quash media industry complaints that it is soft on piracy.
The e-mail is among thousands of pages of internal evidence uncovered in the three years since Viacom accused YouTube owner Google of intentional copyright infringement.
But, Google countered with the argument that Viacom, which had sought to buy YouTube, had made it impossible to tell when material had been uploaded illegally.
Google claimed Viacom had deliberately disguised videos it posted for promotional purposes to make them look like they came from individual users.
Lawyers for Google said there was no way of knowing if videos were uploaded by users or by copyright owners.
YouTube was not obliged to remove material unless asked to do so by copyright owners, and had done so quickly once alerted to it, they said.