The priest suspected of being involved in the 1972 Claudy bombing met Martin McGuinness shortly before he died. The Sinn Fein MP said Fr James Chesney talked about his support for a united Ireland, but he did not mention the attack, which killed nine people.
"I never knew Fr Chesney before Claudy; I never knew Fr Chesney for many years after the bombing," he said.
"I was told he was a republican sympathiser; would I go and see him and meet with him in County Donegal?"
Northern Ireland's deputy first minister added: "There was no mention whatsoever of the Claudy bomb. During the course of that, he just talked about his support for a united Ireland."
In 2002, Mr McGuinness issued a statement to BBC Northern Ireland current affairs programme Spotlight, saying: "I have never met Father Chesney, nor do I have any knowledge of him other than from media reports."
The Police Ombudsman said last month that the police, the Catholic Church and the state conspired to cover up Fr Chesney's suspected role the no-warning car bomb, one of the worst atrocities of the Troubles.
The investigation found high-level talks led to Fr Chesney, a suspect in the attack, being moved to the Irish Republic.
No action was ever taken against Fr Chesney, who detectives believed was the IRA's 'director of operations' in south County Londonderry. He died of cancer in 1980 at the age of 46.
No paramilitary group has ever claimed responsibility for the Claudy bombings, and no-one has been convicted of them.
Meanwhile, Deputy Prime Minister Nick Clegg has said the government at the time should have carried out an investigation.
"The government is profoundly, profoundly sorry that Fr Chesney was not properly investigated for his suspected involvement in this hideous crime at the time, and that the victims and their families have quite simply been denied justice," he said.
"But I do also want to reiterate that although the government acted wrongly in not insisting that the police investigate, it was terrorists who were responsible for this despicable and evil attack."
Mr Clegg was speaking in the Commons in response to a question from DUP MP Gregory Campbell.
He was standing in at prime minister's questions for David Cameron, who has travelled to France to be with his father who has suffered a stroke.
SIC: BBC/UK