Citing three sources close to the Saudi and Emirati royal families, the news outlet said Kushner provided the heir to the Saudi throne details about Saudi princes who were not loyal to him.
According to a separate source, Mohammed bin Salman is said to have told the Abu Dhabi crown prince, Mohammed bin Zayed Al Nahyan, that Kushner was “in his pocket”.
Kushner’s lawyers have rejected the report as “false and ridiculous”, adding that the allegations did not “merit response”.
Dozens of Saudi princes, businessmen, and other senior officials were placed under arrest at the Ritz Carlton in the Saudi capital, Riyadh, in November, ostensibly over accusations of corruption.
Some were later released but only after paying huge sums back to the Saudi state.
The Intercept report comes just weeks after Kushner had his White House security clearance to access highly classified US intelligence revoked.
According to the Washington Post, officials from United Arab Emirates (UAE), China, Israel and Mexico, had “privately discussed ways they can manipulate Jared Kushner”.
Kushner and the Saudi prince are said to have struck up a close relationship since Trump’s inauguration and the two are believed to have talked into the early hours during a visit by Kushner to Saudi Arabia in October.
The 37-year-old has reported earned the ire of others in the Trump administration, including the White House chief of staff, John Kelly.
Kelly is reportedly looking at ways of pushing Kushner and his wife Ivanka Trump from their roles at the White House.
Mohammed bin Salman is currently on a two-week state visit to the US.