This “New York Story” may not be fit for children.

Schlubby director Woody Allen was seen palling around Manhattan with billionaire convicted child-sex creep Jeffrey Epstein.

Epstein put his arm around the cradle-robbing director-actor and quietly talked as the pair strolled on the Upper East Side Sunday with Allen’s 35-years-younger wife, Soon-Yi, in tow.

“[Epstein] was hugging him and talking close to his ear . . . [He] had his arm on Woody’s shoulder,’’ a spy told The Post.

“They appeared to have been walking together’’ along Madison Avenue beforehand, and the three then started “talking and laughing’’ as they neared Epstein’s East 71st Street town house, the source said.

Allen, 77, and his 42-year-old wife — the adopted daughter of ex-love Mia Farrow — live on East 70th Street.

They all went into Epstein’s building after the walk, the source said.

Epstein’s conviction hasn’t apparently put a damper on his high-flying lifestyle: State records show the convicted sex offender lists his addresses as St. Thomas in the Virgin Islands, Paris, Palm Beach in Florida and on New York’s Upper East Side.

Among his current vehicles, records show Epstein counts a pair of Cadillac Escalades and a Bentley Arnage in New York, another Escalade and a Mercedes-Benz in Florida, and another Escalade in the Virgin Islands.

A rep for Allen did not respond to a phone call or e-mail seeking comment about the trio’s afternoon out, and no one answered 60-year-old Epstein’s door when a Post reporter knocked Monday afternoon.

It’s not the first time that Epstein and Allen have been seen together.

Allen was a guest at a celeb-packed party Epstein threw at the town house for his old pal, Britain’s Prince Andrew, in December 2010.

Allen was said to have asked the prince about his ex-wife, Sarah Ferguson, and Andrew replied, “She’s very well — we live together.”

Epstein, a former hedge-fund big, did time in 2008 under a deal in which he confessed to two counts of soliciting a minor for prostitution and soliciting prostitution.

His victim was identified in court papers as a 14-year-old girl identified only as “Jane Doe.”

Epstein was accused of paying the youngster — one of a string of girls who allegedly visited him — $200 for a massage at his Palm Beach retreat in 2005.

And Farrow once accused Allen of molesting their then 7-year-old adopted daughter, but the allegations were never proven.