A ministry statement said, "Hamas recognized its responsibility during the internal investigation and it was decided that the group will pay compensation for the families of the victims."
It said the acknowledgement came after internal disputes among Hamas leaders and concern about the group's reputation.
But Hamas leader Sheik Ismail Haniya denied the ministry's statement, saying, "I have no knowledge about what the Internal Ministry said and the statement is completely untrue."
The Palestinian Authority and Hamas had exchanged accusations over the explosion, which occurred in Gaza in September during a Hamas parade celebrating Israel's withdrawal from the strip.
The PA said that the explosion resulted from a Qassam rocket paraded on the roof of a military jeep, but Hamas insisted the explosion was due to an Israeli rocket fired from a drone.
2014: The Year in Music [PHOTOS]