Appearing on Fox News' Hannity Wednesday, Giuliani said Trump funneled the money through Cohen's law firm over several months by putting him on a "retainer of $35,000 when he was doing no work for the president."
Cohen made the payment to Daniels, whose legal name is Stephanie Clifford, in October 2016 in regards to an alleged sexual encounter between Daniels and Trump.
Giuliani said the money Trump used to repay Cohen didn't come from his 2016 presidential campaign funds.
"That money was not campaign money," Giuliani said. "It's not campaign money. No campaign finance violation."
Trump had previously denied knowledge of the payment and said he was unaware where the money came from, while Cohen had said he wasn't reimbursed by the president.
Giuliani said Trump was "probably not aware" of the payment at the time it was made and also didn't know about the specifics of the payments.
"He did know about the general arrangement that Michael would take care of things like this. Like I take care of things like this for my clients. I don't burden them with every single thing that comes along," Giuliani said.
Daniels filed a lawsuit seeking to nullify a hush agreement arranged by Cohen and involving Trump in exchange for the $130,000 payment. She also filed a subsequent defamation lawsuit against Trump for claiming a composite sketch of a man who allegedly threatened her to not speak about their alleged affair.
Giuliani, the former mayor of New York City, joined Trump's legal team April 19 to represent him in regards to Special Prosecutor Robert Mueller's investigation into alleged Russian interference in the 2016 presidential election.