The "Thriller" singer - who recently sparked controversy by reportedly wearing women's clothing during a day out in St. Tropez - is said to have hired four bodyguards and is wearing a bullet-proof vest at all times, after receiving a number of threatening letters.
A source said told Britain's Daily Star newspaper: "This person is plaguing his life and has sent some seriously dodgy letters."
"They are from a man who works as a drag queen in the seedy Kings Cross area of Sydney, Australia."
"The content is eerie to say the last and this person is seemingly obsessed with Michael."
The alleged stalker - who goes under the name of Melanie - has bombarded the 48-year-old pop superstar with up to 100 lewd letters a day, begging him for a relationship and asking for his hand in marriage.
The source added: "He writes all kinds of things, saying he knows Michael and wants to marry him. He tells Michael he needs to marry him."
"Michael has been having problems sleeping because of this guy."
