Reverend Alex Brown, 60, who has served at St Peter's Church in Cornfield Terrace, St Leonards, for 18 years, was arrested at his home in Blomfield Road in a series of dawn raids by 35 police officers on six properties.
He is accused of holding services to allow immigrants from outside the European Union to marry those with the right to stay in the UK.
Rev Brown appeared before Hastings magistrates yesterday (Thursday) charged with conspiring to facilitate a breach of immigration laws and solemnising a marriage according to Church of England rites without banns having been published.
Wearing a grey t-shirt he spoke only to confirm his name and no plea was entered.
He was granted bail with a condition to reside at a flat in Baldslow Road until his next court appearance at Lewes Crown Court on July 17.
Also appearing in court was Ukranian-born Vladimir Buchak, 32, of Anglesea Terrace, who was charged with conspiring to facilitate breach of immigration laws, peverting the course of justice and using a false Estonian passport.
He was remanded in custody.
Detective Inspector Andy Cummins, of the Uk Border Agency, said: "The arrests follow an 18-month investigation into allegations that nearly 180 sham marriages had been arranged at the local St Leonards church, allowing non-EU nationals to remain within the UK and Eu member states."
A business offering advice and translation services to the Eastern European community in Kings Road was also search as part of the operation.
Parishioners have spoken of their shock at Rev Brown's arrest.
A neighbour in Blomfield Road said: "I know him and he is a nice man."
A St Peter's Road resident added: "He was well known in the area and is a lovely man. It is such a shock."
A spokesman for the Diocese of Chichester said the vicar - who was a governor at St Paul's School - had been suspended from duties pending the outcome of the investigation.
"It is with great sadness and regret that the Bishop of Lewes has received a report of the arrest of the Rev Alex Brown, the Vicar of St Peter's, Bohemia, St Leonard's," he added.
"The church has been cooperating fully with the police and other agencies in their ongoing investigations since the extent and seriousness of this matter came to light.
"The bishop is immediately concerned for the well-being of the congregation at St Peter's, who will be upset and hurt by the news. He has taken steps to ensure that they are looked after pastorally and every support is being given to help church life continue as normally as possible.
"He has also ensured that a level of pastoral support and care is in place for the Rev Alex Brown.
"The church requires high standards of its clergy and we are not prepared to tolerate criminal offences or any action that brings the Church into disrepute, not least from those who should be setting an example to others. In that light the Rev Alex Brown has been suspended from his duties pending the outcome of the continuing police investigations."
Days before his arrest, Reverend Brown had announced in local magazine Bohemia Village Voice that he intended to resign at the end of August.
"It is with great sadness that I have tended my resignation to Bishop John of Chichester in order to move back to the North of England to be nearer my family," said the article.