Yahoo had offered adult products on its shopping pages - where the company gets a cut of the sales - for two years.
They bombarded Yahoo with emails in protest at news that the company was expanding its online offerings of porn videos.
Company president Jeff Mallett said Yahoo had responded swiftly to its users' concerns.
Yahoo had offered adult products on its shopping pages - where the company gets a cut of the sales - for two years.
Pornographic sites are one of the few categories on the internet that make a profit.
Mr Mallett denied Yahoo had significantly increased its adult offerings, but said it had created a new category for them on its shopping pages, while tightening access controls to keep children out.
"Our main concern is our users. Their opinion matters most," he said. "It's not a case of what has changed or not changed."
The company also announced it would not sign any new contracts for banner adverts for adult products.
The withdrawal of sex shopping will not be immediate, but the changes will be made over the next few weeks.
Hard times
The controversy comes at a bad time for Yahoo; its online advertising revenue, the source of 90% of its income in 2000, has fallen dramatically with the decline of dot.com companies.
More than 400 redundancies, or 12% of the company's workforce, have been announced.
On Friday, the religious authorities in Saudi Arabia called on the world's one billion Muslims to boycott Yahoo and other "sites that seek material interest at the expense of morals".
Yahoo has also run into disputes over the existence of Nazi merchandise on its extensive hierarchy of sections and subsections.
And it has come under fire for hosting online chats by white supremacists and other groups.