The shocking crime is alleged to have taken place at their family home in Blackpool where the teenager lives with his two brothers.
It has been reported that the sex attack took place last weekend.
The 14-year-old, who cannot be named for legal reasons, appeared before District Judge Jeff Brailsford sitting at Blackpool Magistrates Court.
His case was adjudged a "grave crime".
The judge released the teenager on bail ahead of a hearing at Preston Crown Court on 11th March.
The previous youngest to face the same charge appeared in court at Swansea in 2004 at the age of 15.