The 80-year-old actress revealed during a phone Interview with Entertainment Weekly that the photo was taken at a party Paramount threw for her.
"All of cinema was there, it was incredible," she said. "And then comes in Jayne Mansfield, the last one to come. For me, that was when it got amazing."
Loren goes on to say the former Playmate came straight to her table and sat down next to her.
"Listen. Look at the picture," she said referencing the famous image. "Where are my eyes? I'm staring at her nipples because I am afraid they are about to come onto my plate. In my face you can see the fear. I'm so frightened that everything in her dress is going to blow — BOOM! — and spill all over the table."
Asked about other, more lively photos taken of her that evening, Loren said the picture of her eyes on Mansfield's breasts "is the one that shows how it was."
"This is the only picture," she said, later revealing that she refuses to autograph the image for fans.
"I don't want to have anything to do with that," she explained. "And also out of respect for Jayne Mansfield because she's not with us anymore."
Mansfield died in a car crash in 1967 at age 34.
Joe Shere, who captured the image, was a New Jersey darkroom printer and apprentice photographer before joining the U.S. Army, where he became chief of the photo division for the Signal Corps. Shere later went to Hollywood, where he worked for several publications. His brother, Sam Shere, shot the famous Hindenburg disaster photograph in 1936.
UPI archives hold several photos of Mansfield from the same era.