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Iggy Azalea allegedly recorded a sex tape that could make her millions upon millions -- according to a Hollywood porn boss, but Iggy tells TMZ she can't cash in on the vid ... because it's NOT her!

Vivid honcho Steven Hirsch tells TMZ he has seen some footage which he says appears to be Iggy with an ex-boyfriend -- and from the little he's seen ... he's sure it could easily top Kim Kardashian's legendary sex tape in sales.

Hirsch says he's already reached out to the 24-year-old "Booty" rapper to open negotiations on what could be a multi-million dollar deal -- but the problem is Iggy's camp says Hirsch's eyes are playing tricks on him. I-G-G-Y is not the chick on vid doing the dirty ... and they're ready to sue over the alleged footage.

Of course, without Iggy signing off on it ... the vid can't be legally released. It also means she won't collect years and years of mailbox money ... like Ray J still does.

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