Sir Richard Dearlove told the inquest his secret service agents did not murder her.
And he revealed his fury at the accusations, saying he took them ‘personally’.
Sir Richard told the jury that this was a "very personal allegation" considering he was head of MI6 at the time of the fatal Paris car crash in August 1997, which killed Diana, Dodi and their driver Henri Paul.
Sir Richard’s appearance at the inquest is a rare exception to the cardinal principle within the intelligence services never to comment on any allegations made against it.
His denial rebuts claims made by Mohamed al Fayed that Diana and his son Dodi were killed by MI6 on the orders of the Duke of Edinburgh because she was pregnant with Dodi’s child and the couple were about to get engaged.
Ian Burnett QC, for the coroner, asked: "During the whole of your time in SIS (Secret Intelligence Service), from 1966 to 2004, were you ever aware of the service assassinating anyone?"
Sir Richard replied: "No, I was not."
Mr Burnett also went on: "No assassinations under your authority in any of those posts?"
"No," Sir Richard said firmly.
Sir Richard said it was "utterly ridiculous" to claim that Prince Philip and Prince Charles were active members of MI6.
He also denied as "absurd" the claim by Mohamed al Fayed that the security services really run the country with Prince Philip.
Mr Burnett said: "It is suggested that Prince Philip and the intelligence agencies really run this country and that we are not a Parliamentary democracy."
Sir Richard replied: "I do not want to be flippant. I’m tempted to say I’m flattered, but this is such an absurd allegation that it is difficult to deal with…
"It’s completely off the map. I cannot think of any other way of saying it."
He said the claim that MI6 could control a conspiracy involving the French police, emergency and forensic services was "a mischievous and fanciful allegation".
Sir Richard said Prince Philip’s relationship with the Secret Intelligence Service was "absolutely nothing of substance".
Prince Philip’s only contact with the agency was during visits to their offices as the Queen’s consort, he said.
Sir Richard told the inquest he was on holiday in the US on August 23, 1997, when Diana died, but had secure phone contact with London.
Mr Burnett said: "Was there any operation of any kind made against or in respect of the Princess of Wales or Dodi Fayed during that summer?"
Sir Richard: "Absolutely not".
Mr Burnett: "That includes all such things as eavesdropping, surveillance, bugging – anything that anyone could think? Sir Richard: "Everything."
Mr Burnett said: "With what degree of confidence are you able to tell the jury of that fact?"
Sir Richard replied: "Complete confidence".
Sir Richard worked for the Secret Intelligence Service or MI6 in various roles, both at home and abroad, between 1966 until his retirement in 2004 as its chief.