By Agence France-Presse
After weeks of dodging questions about the alleged tryst, Trump offered a flat "no" when asked if he knew about the payment made in the final weeks of the 2016 election.
The actress, Stephanie Clifford -- who goes by the screen name Stormy Daniels -- claims she received the money to cover up a sexual encounter with Trump more than a decade ago.
The president's long-time lawyer Michael Cohen has admitted to making the payment, and has accused Daniels of breaching a non-disclosure agreement she signed in return.
Last month Daniels told 21 million TV watchers that she had unprotected sex with Trump after meeting at a celebrity golf tournament in Lake Tahoe in July 2006 -- shortly after Trump's wife Melania gave birth to their son.
That alleged affair and the suspected cover up presents a legal and political minefield for Trump.
Support among America's evangelical Christians -- who make up 25 percent of the population -- was pivotal to his election victory.
While the alleged sexual encounter was said to be consensual, the payment to Daniels could constitute a undeclared campaign contribution.
Trump insisted he did not know why Cohen made the payment. "You'll have to ask Michael Cohen. Michael is my attorney. You'll have to ask Michael."
Asked if he knew where the money came from, Trump told reporters on Air Force One: "No, I don't know."
That claim was immediately challenged by Daniels' lawyer Michael Avenatti.
"We very much look forward to testing the truthfulness of Mr. Trump's feigned lack of knowledge concerning the $130k payment," he tweeted.
"As history teaches us, it is one thing to deceive the press and quite another to do so under oath."
Trump had never spoken publicly about the allegations and has repeatedly ignored questions from reporters about the issue, which has dogged the White House for months.
Daniels is challenging the validity of the non-disclosure agreement in court, saying Trump never countersigned it -- a claim that Trump's comments on Thursday would appear to support.
Such contracts, while legal, have frequently been used by powerful men to hush up affairs, workplace harassment or even alleged sexual abuse.
Daniels is also suing Cohen for defamation and has sought to force the president to testify under oath.
So far the First Lady has not responded, but her spokeswoman Stephanie Grisham urged respect.
"While I know the media is enjoying speculation & salacious gossip, I'd like to remind people there's a minor child who's name should be kept out of news stories when at all possible," she said in a tweet.