Dotcom claims he has proof that Mr Key lied about not knowing who the Megaupload millionaire was until just before the raid on his Coatesville mansion on January 20.
"I know for a fact that John Key knew before January 19," Dotcom told TVNZ's Q+A programme yesterday.
Dotcom is fighting extradition to the US where authorities allege copyright, money laundering and fraud charges in relation to his Megaupload file-sharing website.
Speaking from Darwin on his way to Cambodia for the East Asia Summit today, Mr Key said this was "just plain wrong".
"Firstly, he's saying that the Government is playing some very, very active role outside of the extradition treaty being invoked. I think that's completely fanciful and not true.
"Secondly, I've always said to the best of my recollection the first I'd ever heard of the guy was the 19th of January. I've seen nothing to conflict that view that the first I heard of the guy was the 19th of January."
Mr Key said he had no doubt that Dotcom would continue to make allegations against the Government.
"He will try and draw one and one together and he'll get three as he has in the past. This is a guy who now has made publicly quite a few statements that have proved to be incorrect."
Dotcom said yesterday that Mr Key was "running around naked and telling everybody he has clothes on".
"Everyone can see he's naked. It doesn't make any sense."
He said there was "only one reason" why Mr Key would "not be upfront and honest".
It showed there was political interference in the investigation and proving that could "stop the whole extradition procedure", he said.
"If we can show that the Government here has had an active role in the magnitude of this whole case and had a proactive role - rather than a reactive role - to impress the United States government ... it's a monster issue."