The 31-year-old force marksman, the first Sussex officer to face such a charge, is also accused of manslaughter.
He has been freed on bail and is due to appear before Bow Street magistrates in London on May 21.
Four other Sussex officers have been charged with "misfeasance" or misconduct in public office, which carries a maximum sentence of life imprisonment.
They are Supt Chris Burton, 42, Acting Det Chief Insp Kevin French, 46, Det Insp Christopher Paul Siggs, 40, and PC Robert Shoesmith, 37.
They have also been released on bail to appear at Bow Street on May 21.
All five officers charged are suspended from duty pending the outcome of their cases.
Last night PC Sherwood's solicitor, Ben Brandon, said his client emphatically denies the charges and strenuously maintains his innocence.
The Crown Prosecution Service decided there was insufficient evidence for any charges against PC Stephen Crocker, Chief Constable Paul Whitehouse, Deputy Chief Constable Mark Jordan and assistant chief constables Nigel Yeo and Maria Wallis. She has also has been eliminated from Sussex Police Authority disciplinary inquiries.
Mr Ashley, 39, died after being shot during a police raid on his home in Western Road, St Leonards, on January 15 last year.
Mr Ashley, wanted for alleged drugs offences, was naked and in bed with his girlfriend, Caroline Courtland Smith, when officers arrived.
She said: "I hope now we will be given some answers to explain the horrific events of which Jimmy and I were victims."
There were two investigations into the shooting, one by Kent Police under Deputy Assistant Commissioner Barbara Wilding, concerning the officers at the scene; and one by Hampshire Chief Constable Sir John Hoddinott concerning the involvement of senior officers.
Files on the two investigations were submitted to the CPS in December and the advice of Treasury counsel was sought before yesterday's decisions were announced.
Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.
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