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"I agreed to a photo shoot and having an ISI tattoo in a humorous way but I did not have any nude photos. My pictures have been morphed," she said.
Lawyers for Malik said they want the December issue of the magazine pulled from shelves and their client wants $2 million in damages.
Pakistani Interior Minister Rehman Malik indicated Islamabad may see legal action over the picture.
"First, let us see whether it is real or fake," he said.
Kabeer Sharma, editor for FHM India, said the photo was not doctored.
"Maybe she is facing some kind of backlash, so maybe that's why she is denying it," he said. "We have not Photoshopped or faked the cover. This is what she looks like, she has an amazing body."