This year's double Brit awards winner made the appearance on the children's TV show singing an educational song.
Ed filmed the programme back in October 2013.
But it has taken until now for bosses to unveil his performance of Two Different Worlds with Elmo, Grover and the gang.
The pop song teaches children about the different rules for when talking at home or in school.
The lyrics are: "At home I can speak whenever I please. I can talk real loud and shoot the breeze.
"At school I raise my hand in the air when there's something that I want to share."
The Muppets sing along with Ed as he plays his guitar.
Announcing its release the 24-year-old posted the video on his Twitter page before adding: "Filmed that a long time ago, happy it's finally out."
The two minute 49 second video had been viewed more than 61,000 times.
Last month, whilst on tour in Australia, Sheeran also filmed an appearance, playing himself, in the Australian soap Home and Away.
There is no word on when the episode will air and Channel 5 have said it was keeping the storyline "under wraps for now".
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Ed Sheeran has been on Sesame Street performing a song that is not one of his usual hits.