Motor racing boss Max Mosley has told MPs that a newspaper article showing pictures of him at an orgy had a "terrible, terrible" effect.
The News of the World had taken his "dignity" and hurt his family, he told the culture, media and sport committee.
Mr Mosley, president of the International Automobile Federation, said the situation was "appalling".
Mr Mosley successfully sued the News of the World over claims that the orgy had had a Nazi theme.
The court found no evidence of this and ruled that his privacy had been breached. He was awarded £60,000 in damages.
'They all know'
He is now taking his challenge to privacy laws to the European Court of Human Rights.
The committee is investigating press standards, privacy and libel laws. Gerry McCann, father of missing Madeleine McCann, is due to give evidence later.
Asked about the day the News of the World article had been published about him last July, Mr Mosley told the MPs: "It's very difficult to describe if something like that happens completely out of the blue... I had been doing this for 45 years and there had never been a hint and nobody knew."
He added that he had been "outraged", saying: "If someone takes your goods you have got some chance of replacing them. If someone takes your dignity, you have got no chance of replacing it."
Mr Mosley also said: "You know that they know and no-one would ever be rude enough to make an unpleasant joke. You go into a restaurant and nobody says anything, but you know they all know...
"That's not very nice for me. What's really appalling is for my family."
Mr Mosley added: "Can you imagine seeing pictures like that of your father? It's just appalling.
"If there was a huge, genuine public interest then of course they should do it. It has to be a very good public interest."
Mr Mosley, whose federation sets the rules and regulations for Formula One racing, was awarded a record £60,000 in privacy damages against the News of the World over the story.
The paper was also ordered to pay £420,000 of his legal costs but his total bill came to more than £500,000.
Mr Mosley said he had not been "reckless" in attending sado-masochistic sex parties while being a public figure.
He added: "It's not even talked about outside the circle. Nobody knew. My closest friends didn't know. My wife didn't know.
"The fact that that had worked so well... made me feel confident."
Mr Mosley, 68, whose father was the fascist leader Oswald Mosley, said: "I was born, as you undoubtedly know, into a rather unusual family...
"I worked hard over a number of years to build up a certain reputation."
He added: "You do this because you want to re-establish yourself and your family as proper people and if something like this happens it destroys the whole thing."
Mr Mosley told the committee he ended up having to pay £30,000 in the case.
He said: "To me it was worth it, but an awful lot of people would say 'if in addition to getting everything repeated again, I'm going to have a big bill, I'm not going to do it'."
Mr Mosley said he had not ruled out bringing a separate libel action against the News of the World but did not want to appear "money-grabbing or vindictive".