"There are no members of the Al-Qaeda organisation in Egypt. What has been said recently about members of the group being in Sinai is baseless," national security chief Hamed Abdallah told the official MENA news agency.
He said his agency -- which replaced the feared state security service when it was disbanded after a popular uprising that toppled president Hosni Mubarak in February -- "is cooperating with local, regional and international agencies to protect national security, fight international terror and border crimes."
Abdallah's statements come after Netanyahu told the Israeli parliament's foreign affairs and defence committee on Monday that the Egyptian government was having trouble controlling the Sinai Peninsula.
"Egypt is having a difficult time exerting its sovereignty over the Sinai," an official quoted Netanyahu as telling the closed-door meeting.
"International terror groups are mobilising in Sinai, increasing their presence due to Sinai's proximity to Gaza," Netanyahu said.
Israel, which had close ties with the deposed Egyptian leader, is suspicious of the new government as it has shifted course, most recently ending the closure of the Hamas-ruled Gaza Strip.
Egypt opened the Rafah crossing into Gaza over the weekend, prompting Israel to warn the move would boost Hamas, which is blacklisted as a terrorist group by the European Union and the United States as well as Israel.
The new Egyptian government was also key in brokering a surprise unity pact between Hamas and the rival Fatah movement of Palestinian president Mahmud Abbas.