In an interview with London-based newspaper The Times, Zeta-Jones said she was "devastated" following the news, which surfaced early this year.
"My children and I were profoundly devastated by those allegations. And I was torn about where my absolute morals lie," the 49-year-old said. "This woman came out of nowhere and accused my husband. I had a very big conversation with him, with the kids in the room, and said, 'Do you understand if more comes out...'"
In order to get out ahead of the story, the 74-year-old actor revealed in January that he had been contacted by a writer from The Hollywood Reporter about allegations from a former female employee — allegations that the outlet eventually did report on.
Douglas gave an interview with Deadline, defending himself as he denied the woman's claims that he had "masturbated in front of her" 32 years ago and that he spoke "raunchily" on the phone in front of her in conversations with friends.
Zeta-Jones added that she and her husband both fully support the #MeToo movement, so the situation was particularly tough to grapple with.
"It was a really hard position for me and, in the height of it all, it was nasty," Zeta-Jones said.
As for how Douglas attempted to prove to his family — which includes the couple's two children, son, Dylan, 18, and daughter, Carys, 15 — that he wasn't guilty of the allegations, she think he did the right thing.
"By telling us that there is no story here and that time will tell. And, of course, it did. There was nothing to back it up at all. For any accusation that comes out that isn't backed up, that knocks the movement back 20 years," Zeta-Jones continued.
The famous couple have been married for 18 years, and while the actress confesses they've had their ups and downs, she's not the type of person to "throw the towel in very quickly on anything."
The interview isn't the first time Zeta-Jones has addressed the issue. She previously appeared on The View shortly after Douglas' statement.
"Michael came out with that preemptive statement. He was articulate, said it from the heart, was honest, open and transparent. He now has to take the next step for where he goes from here. It happened 30 years ago, it was B.C.: before Catherine," she said at the time.
At the time, Zeta-Jones also made additional remarks about the #MeToo movement and how it relates to her daughter.
"I have a daughter. As we battle through now, I hope this is something she won't even have to think of," Zeta-Jones said.
Douglas, for his part, hasn't made any additional comments about the accusations.