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The "Clown Doll" is a villain that appears in the urban legend based somewhat on "The Babysitter And The Man Upstairs" legend.
A "friend of a friend", (normally a girl in her teens), is babysitting for a family in Newport Beach, Ca. The family is wealthy and has a very large house with a ridiculous amount of rooms. The parents are going out for a late dinner/movie. The father tells the babysitter that once the children are in bed she should go into this specific room (he doesn't really want her wandering around the house) and watch TV there.
The parents take off and soon she gets the kids into bed and goes to the room to watch TV. She tries watching TV, but she is disturbed by a clown doll in the corner of the room. She tries to ignore it for as long as possible, but it starts freaking her out so much that she can't handle it.
She resorts to calling the father and asks, "Hey, the kids are in bed, but is it okay if I switch rooms? This clown doll is really creeping me out."
The father says seriously, "Get the kids, go next door and call 911."
She asks, "What's going on?"
He responds, "Just go next door and once you call the police, call me back."
She gets the kids, goes next door, and calls the police. When the police are on the way, she calls the father back and asks, "So, really, what's going on?"
He responds, "We don't HAVE a clown doll." He then further explains that the children have been complaining about a clown watching them as they sleep. He and his wife had just blown it off, assuming that they were having nightmares.
The police arrive and apprehend the "clown," who turns out to be a man with dwarfism who escaped from a mental hospital. In some versions he is a homeless person dressed as a clown, who somehow got into the house and had been living there for several weeks. He would come into the kids' rooms at nights and watch them while they slept. As the house was so large, he was able to avoid detection, surviving off their food, etc. He had been in the TV room right before the babysitter right came in there. When she entered he didn't have enough time to hide, so he just froze in place and pretended to be a doll.
(In darker versions of the tale he is instead an escaped mental patient or serial killer rather than a perverted homeless guy. Sometimes he is the ghost of a clown that died in the house. Sometimes he follows the babysitter when she goes to call the police. In either example he can be considered antagonistic).